What determines whether a corrective tax or quantity regulation is a better choice for controlling an externality?

Question

Quizplus · Accepted Answer

If more is known about the marginal external costs or the socially optimal quantity, then a corrective tax or quantity regulation can be chosen accordingly. If the marginal external cost is known, a corrective tax can be imposed to internalize the externality, and if the socially optimal quantity is known, a quantity regulation can be imposed to achieve the desired outcome. Therefore, the choice depends on the information available about the externality and its effects.

What Determines Whether a Corrective Tax or Quantity Regulation Is