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Questions tagged [pigouvian-taxes]

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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, ...
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1answer
470 views

Difference between pigovian tax and sin tax?

Could they be interchangeably used? Or, is one subset of the other?
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1answer
292 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) ...
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1answer
136 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?
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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. ...
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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 ...
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2answers
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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 ...
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1answer
201 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 ...
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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 ...
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1answer
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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 ...
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1answer
179 views

A market correction for an industry which has had long-run negative externalities

Take a market where there have been long-run negative externalities. That is to say, the negative externalities have been in place long enough to have played a part in the investment decisions for all ...