Pigovian tax

A Pigovian tax is a levy imposed by the government on activities that generate negative externalities, such as pollution, to make the perpetrator account for the social costs they impose on others. This economic tool aims to correct market inefficiencies by aligning private incentives with public welfare, encouraging more responsible behavior in fields like environmental protection and public health, though its effectiveness often hinges on accurate pricing of those externalities in today's complex global economies.