Pigovian taxes are designed to reduce pollution to a level that is socially optimal. They are intended to internalize the external costs associated with negative externalities (such as pollution) by encouraging firms to reduce their harmful activities, thereby aligning private costs with social costs.
Pigovian taxes are designed to do which of the following?
Reduce the socially optimal level of production
Punish firms for polluting
Deregulate pollution control
Reduce pollution to a level that is socially optimal
1 answer
1 answer