Pigouvian Subsidy
Definition
A subsidy equal to the marginal external benefit of an activity — internalizes positive externalities and pushes output to the efficient level.
Example
Subsidizing vaccines to capture their public-health spillovers.
A subsidy equal to the marginal external benefit of an activity — internalizes positive externalities and pushes output to the efficient level.
Subsidizing vaccines to capture their public-health spillovers.