Taxation is often able to correct market externalities at a lower cost than regulations designed to achieve the same goal.

Question

Quizplus · Accepted Answer

Taxation can potentially correct market externalities by incentivizing behavior that reduces negative externalities or discouraging behavior that creates negative externalities. This is often more cost-effective than implementing regulations that may require more resources for enforcement and compliance.

Taxation Is Often Able to Correct Market Externalities at a Lower