Pigouvian subsidization:
A) involves the use of taxes or fees to remedy negative externalities.
B) involves the use of subsidies to remedy negative externalities.
C) is a legal principle requiring a party who takes an action that harms others to compensate the affected parties for some or all of their losses.
D) requires that victims of an externality pay a tax to the producers of the externality.

Question

Quizplus · Accepted Answer

Pigouvian subsidization involves using subsidies to encourage activities that produce positive externalities, in order to offset or counteract negative externalities. This is different from Pigouvian taxation, which involves imposing taxes or fees to discourage activities that lead to negative externalities.

Pigouvian Subsidization