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What Is Meant by the Term "Internalizing an Externality"? How

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Essay

What is meant by the term "internalizing an externality"? How does a Pigovian tax or subsidy internalize an externality?


Definitions:

Terms

In logic, the concepts or entities used in an argument or statement.

Donkey

A domesticated hoofed mammal of the horse family with long ears and a braying call.

Ass

A term that, depending on context, can colloquially refer to a person's buttocks or disparagingly refer to a person considered foolish or stubborn.

Dead Metaphor

A metaphor that has been used so often it has lost its original figurative meaning and is taken literally.

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