1 commentPigovian tax
I was doing some reading on economics and stumbled upon this term that I hadn’t seen before: Pigovian Tax. A Pigovian tax is one that is applied to things with negative externalities, such as pollution.
Some context:
Taxes necessarily make certain activities less desirable. If the expected value of an investment is $N, but a heavy tax is applied to a successful investment, the expected value will become lower and prudent investors will not be willing to put as much money into it. Taxing things like pollution makes polluting a less attractive proposition than it is now, and encourages pragmatic development of clean technologies.
A variety of well-known economists and politicians support this idea.
1 comment
[...] may remember from my previous post that he’s talking about a Pigovian tax. January 12, 2009 Tags: economics, energy, [...]
Leave a Comment