Pigouvian Taxes

Negative Externalities: Negative externalities occur when the production or consumption of a good imposes costs on third parties who are not involved in the transaction.

Social Cost/Benefit Analysis: Social cost/benefit analysis is an economic tool used to evaluate whether certain policies or projects provide overall benefits to society by comparing their total costs and benefits.

Coase Theorem: The Coase theorem states that if property rights are well-defined and transaction costs are low, private parties can negotiate and find efficient solutions to externalities without government intervention.