Which statement correctly describes what a Pigouvian subsidy is?
A) Subsidies received by the producers are called Pigouvian subsidies.
B) Pigouvian subsidies are awarded to producers whose goods have external benefits.
C) Taxes on producers creating negative externalities are called Pigouvian subsidies.
D) Lower corporate tax rates are also known as Pigouvian subsidies.

Question

Quizplus · Accepted Answer

A Pigouvian subsidy is a subsidy granted to producers whose goods have external benefits. It aims to correct market failures that arise due to negative externalities by bringing down the cost of production or production expenses for goods and/or services that are deemed to have positive externalities.

Which Statement Correctly Describes What a Pigouvian Subsidy Is