# Questions tagged [pigouvian-taxes]

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### Pigouvian tax with general utility function

Suppose person a's consumption of good $y$ imposes a negative externality on person b. Person a's utility maximisation problem is $$\max_{x_a,y_a} \ u_a(x_a,y_a),$$ subject to $$p_x x_a+p_y y_a=e_a.$$ ...
• 93
1 vote
150 views

### Could a carbon tax be a substitute for VAT?

VAT is a tax on consumption. However, while in some instances it taxes negative externalities (e.g. fossil energy consumption) in many other cases it taxes services without externalities or ...
• 821
1 vote
45 views

### Do carbon taxes in place today apply to carbon embedded in imports?

I’m giving the example of Sweden whose carbon tax is highly regarded and which is the highest in Europe. Source Sweden has a carbon tax of €110 / t. Source This tax does not apply to installations ...
• 821
1 vote
19 views

### What would the price of carbon emissions need to be for the EU to achieve its objective to be carbon neutral by 2050?

The EU committed to net zero green house emissions by 2050. (Source) It is regularly said that the a carbon tax of USD 40-80 / t CO2e (USD 50-100 by 2030) would be sufficient to reach the Paris ...
• 821
1 vote
98 views

### Externalities, Pigouvian Taxes and Wikipedia

It states on Wikipedia: A Pigovian tax (also called Pigouvian tax, after economist Arthur C. Pigou) is a tax imposed that is equal in value to the negative externality. The result is that the ...
• 264
1 vote
19 views

### derivation of pigou taxes in multiple polluter case

I can`t quite wrap my head around one step in deriving the pigou tax in a multiple polluter case. There are j firms, which produce joint product in amount of $k_j$. Joint product can be abated, ...
• 11
1 vote
2k views

### Difference between pigovian tax and sin tax?

Could they be interchangeably used? Or, is one subset of the other?
• 185
1 vote
4k views

### Are there two deadweight welfare losses associated with a Pigovian tax?

I am constructing a diagram for an indirect tax (specific) imposed to correct a negative externality of consumption. There is a deadweight welfare loss from the externality (represented in blue) ...
• 13
1 vote
767 views

### Who pays externalities?

Suppose the state raises taxes in order to internalise externalities. Doesn't the consumer have to pay the additional external costs then, because the prices are raised due to the taxes?
• 113
1 vote
635 views

### Private and Social Optimum with externality in this example

Firstly, I wanted to know if we may be consider as an externality, a situation such that a customer A bought a bike to a seller B, not properly checked - and which may provoke some accidents. ...
• 11
250 views

### Pigouvian subsidies for non-linear marginal external benefits

Suppose an agent is choosing how much $x$ to consume and $p_x=200$. If the agent's marginal private benefit is $MPB(x)=300/x$ and $x$ takes only integer values, then he will choose to purchase just ...
• 825
135 views

### Are there any drawbacks to a hypothetical climate policy?- Carbon tax for reducing Income tax

Disclaimer: I do not have a formal education in economics Here is the idea of my hypothetical policy: graduated over a period, say about 10 years or longer, the income tax is phased out and a carbon ...
351 views

### What are the current economic theories of product advertising?

Are there any well known economic theory references about advertising? It seems you could think of advertising as imposing a negative externality on other producers or on consumers in that it takes up ...
• 2,648
70 views

### Empirical evidence on what makes a border adjustment successful at correcting a distortion without exporting externalities?

One of the challenges of constructing a national or regional market-correction scheme to remove the distortions from negative externalities, is that such a scheme is liable to create leakage: for ...
• 8,123
125 views

### Pricing a negative externality under high uncertainty and severe non-linearity

Take a negative externality such as excess greenhouse gas emissions. We know some awkward things about the economic cost of this externality: There is fairly large uncertainty about the timing of ...
• 8,123