One problem with the effectiveness of Pigovian taxes is:
A) the tax does not directly compensate those who are affected by the externality.
B) knowing whether to impose it on the consumer or producer.
C) the tax is always used to benefit those who bear the externalities.
D) none of the above is a problem of Pigovian taxes.

Question

Quizplus · Accepted Answer

Pigovian taxes are designed to correct externalities by aligning private costs with social costs, but they do not directly compensate those affected by the externality.

One Problem with the Effectiveness of Pigovian Taxes Is