What Is Meant by the Term 'Internalising an Externality'? How

question 25

Essay

What is meant by the term 'internalising an externality'? How does a Pigovian tax or subsidy internalise an externality?

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Definitions:

Sigma Complex

An intermediate stage in certain chemical reactions characterized by a complex in which the central metal atom is bonded to ligands through sigma bonds.

HNO3

Nitric acid, a highly corrosive and toxic strong mineral acid used in the production of fertilizers, explosives, and in the pickling of metals.

P-nitroanisole

An organic compound consisting of an anisole group where a nitro group is attached to the para position of the anisole ring.

Nitro Group

A nitro group is a functional group consisting of a nitrogen atom bonded to two oxygen atoms (−NO2), often contributing to the reactivity of a molecule.