Pigovian tax

Pigouvian taxPigouvian Taxesexcise taxPigou taxesPigovianArthur Pigoudiscriminatory taxationdouble dividend hypothesisfeegreen taxation
A Pigovian tax (also spelled Pigouvian tax) is a tax on any market activity that generates negative externalities (costs not included in the market price).wikipedia
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Tax

taxationtaxeslevy
A Pigovian tax (also spelled Pigouvian tax) is a tax on any market activity that generates negative externalities (costs not included in the market price).
As early as 1920, Arthur Pigou suggested a tax to deal with externalities (see also the section on Increased economic welfare below).

Arthur Cecil Pigou

Arthur PigouA. C. PigouPigou
Pigovian taxes are named after English economist Arthur Cecil Pigou (1877–1959) who also developed the concept of economic externalities.
Pigou's most enduring contribution was The Economics of Welfare, 1920, in which he introduced the concept of externality and the idea that externality problems could be corrected by the imposition of a Pigovian tax (also spelled "Pigouvian tax").

Externality

externalitiesnegative externalitynegative externalities
A Pigovian tax (also spelled Pigouvian tax) is a tax on any market activity that generates negative externalities (costs not included in the market price).
These laws and regulations can take the form of "command and control" regulation (such as setting standards, targets, or process requirements), or environmental pricing reform (such as ecotaxes or other Pigovian taxes, tradable pollution permits or the creation of markets for ecological services).

William Baumol

William J. BaumolBaumolBaumol, William J.
William Baumol was instrumental in framing Pigou's work in modern economics in 1972.
Among his better-known contributions are the theory of contestable markets, the Baumol-Tobin model of transactions demand for money, Baumol's cost disease, which discusses the rising costs associated with service industries, Baumol's sales revenue maximization model and Pigou taxes.

Carbon tax

carbon taxestaxcarbon levy
From an economic perspective, carbon taxes are a type of Pigovian tax and help to address the problem of emitters of greenhouse gases not facing the full social cost of their actions.

Ecotax

green tax shiftgreen taxenvironmental taxes
Ecotaxes are examples of Pigouvian taxes, which are taxes that attempt to make the private parties involved feel the social burden of their actions.

Fat tax

obesity taxes
It is considered an example of Pigovian taxation.

Pigou Club

The Pigou Club is described by its creator, economist Greg Mankiw, as "an elite group of economists and pundits with the good sense to have publicly advocated higher Pigovian taxes, such as gasoline taxes or carbon taxes."

Gilbert E. Metcalf

Gilbert E.MetcalfGilbert Metcalf
In a 1997 paper, Don Fullerton and Gilbert E. Metcalf evaluated the double dividend hypothesis.
Along with Don Fullerton, Metcalf has written a series of papers examining the optimal tax on pollution in a second-best world (the double dividend hypothesis).

Geolibertarianism

geolibertariansgeolibertariangeoanarchism
Some geolibertarians also support Pigovian taxes on pollution and severance taxes to regulate natural resource depletion and compensatory fees with ancillary positive environmental effects on activities which negatively impact land values.

Deposit-refund system

depositdeposit on returned cansDeposit refunds
As with Pigovian taxes a DRS aims to limit pollution of various types by creating an incentive to return a product.

Sugary drink tax

soda taxsugar taxsugary drinks tax
Often-cited examples of such externalities are environmental pollution, and increased public healthcare costs associated with tobacco and sugary drink consumption.
Advocates such as national medical associations and the World Health Organization promote the tax as an example of Pigovian taxation, aimed to discourage unhealthy diets and offset the growing economic costs of obesity.

Sin tax

sin taxesliquor taxcigarette and tobacco taxes
In contrast to Pigovian taxes, which are to pay for the damage to society caused by these goods, sin taxes are used to increase the price in an effort to lower their use, or failing that, to increase and find new sources of revenue.

Economic equilibrium

equilibriumequilibrium pricemarket equilibrium
The tax is intended to correct an undesirable or inefficient market outcome (a market failure), and does so by being set equal to the social cost of the negative externalities.

Market failure

market failuresmarket imperfectionmarket imperfections
The tax is intended to correct an undesirable or inefficient market outcome (a market failure), and does so by being set equal to the social cost of the negative externalities.

Social cost

social costssocialcost
The tax is intended to correct an undesirable or inefficient market outcome (a market failure), and does so by being set equal to the social cost of the negative externalities.

Economic efficiency

efficiencyefficienteconomically efficient
In such a case, the market outcome is not efficient and may lead to over-consumption of the product.

Subsidy

subsidiessubsidizedstate aid
An example sometimes cited is a subsidy for provision of flu vaccine.

Economist

economistseconomicsgovernment economist
Pigovian taxes are named after English economist Arthur Cecil Pigou (1877–1959) who also developed the concept of economic externalities.

Pecuniary externality

pecuniary externalitiesnon-pecuniary externalitiesPecuniary economies
Ultimately, because non-pecuniary externalities overestimate the social value, they are over-produced.

Glenn Loury

Glenn C. LouryLoury, Glenn
In 1980, a new critique of Pigovian taxes emerged from Dennis Carlton and Glenn Loury.

Lans Bovenberg

A. Lans Bovenberg
A. Lans Bovenberg and Ruud A. Mooij argue that there is a first-best case scenario and a second-best case scenario in their article "Environmental Levies and Distortionary Taxation."

Deadweight loss

dead-weight losslosses in efficiencycosts of taxation
With the status quo income tax, deadweight loss exists.