Pigouvian tax

From Market
Revision as of 12:59, 16 June 2009 by Vipul (talk | contribs) (moved Pigovian tax to Pigouvian tax)
(diff) ← Older revision | Latest revision (diff) | Newer revision → (diff)
Jump to: navigation, search

Template:Regulatory policy

Definition

A Pigovian tax or Pigouvian tax is a tax levied on a certain activity intended to reflect the net external cost or negative externality of the activity (i.e., the cost not borne by the people engaging or controlling the activity).

The opposite of the Pigovian tax is a Pigovian subsidy -- a subsidy provided to an activity intended to reflect the net external benefit or positive externality of the activity.