In order for a Pigouvian subsidy to be efficient, the amount it costs the government to implement the subsidy must be less than the economic value of the additional externality benefits created by the subsidy.

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A Pigouvian subsidy is considered efficient if it corrects the market failure by aligning private costs with social costs, not necessarily based on the government's cost to implement it versus the economic value of the additional externality benefits.

In Order for a Pigouvian Subsidy to Be Efficient, the Amount