Answer
Corrective taxes are the taxes enacted to deal with the effects of negative externalities. These taxes are designed to induce the private decision makers to take account of the social costs that arise from a negative external.
Economists argue in favor of taxes rather than regulations because taxes achieve the goals such as reduction in pollution more efficiently.
Work Step by Step
Corrective taxes are the taxes enacted to deal with the effects of negative externalities. These taxes are designed to induce the private decision makers to take account of the social costs that arise from a negative externality.
Economists argue in favor of taxes rather than regulations because taxes achieve the goals such as reduction in pollution more efficiently.
