If government uses taxation to correct for negative externalities, the desired consequence is

Question

Quizplus · Accepted Answer

Taxation on negative externalities, such as pollution, would increase the cost of production for firms and reduce the quantity of the good produced and/or consumed, leading to a decrease in the negative externality. The revenue raised from the tax can also be used to provide subsidies for alternative, less harmful products or technologies.

If Government Uses Taxation to Correct for Negative Externalities, the Desired