A corrective tax is also known as:
A) a command-and-control regulation.
B) a Coase tax.
C) a Pigouvian tax.
D) a Smithian tax.

Question

Quizplus · Accepted Answer

Corrective tax is also referred to as a Pigouvian tax. It is named after economist Arthur Pigou, who introduced the concept of externalities, which are costs or benefits arising from the production or consumption of goods and services that are not reflected in the market price. A corrective tax is designed to correct the market failure caused by negative externalities, such as pollution or traffic congestion, by making the producer or consumer pay the social cost of their actions.

A Corrective Tax Is Also Known As