Pigovian taxes are unlike most other taxes because they:
A)distort incentives
B)move the allocation of resources away from the social optimum
C)raise revenue for the government
D)move the allocation of resources closer to the social optimum

Question

Quizplus · Accepted Answer

Pigovian taxes are designed to correct market failures by internalizing externalities, such as pollution or congestion, in order to move the allocation of resources closer to the social optimum. They are not primarily intended to raise revenue for the government, and they do not distort incentives in the same way that other taxes, such as income or sales taxes, can. While they do change the relative prices of goods and services, which can affect consumer behavior, the goal is to incentivize producers and consumers to reduce negative externalities and increase positive externalities, ultimately leading to a more efficient allocation of resources.

Pigovian Taxes Are Unlike Most Other Taxes Because They