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AP Microeconomics/Unit 4: Imperfect Competition
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Carbon Tax Externalities and Efficiency
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Considering an excise tax placed upon carbon emissions, how could it possibly affect both positive externalities associated with cleaner technologies along with overall market efficiency?

A

Decreased public spending power due, indirectly, rising cost goods services caused tax increase.

B

Reduced competitiveness internationally as domestic firms face higher production costs compared abroad.

C

Amplification existing inequalities because poorer households spend larger proportion incomes energy related expenses.

D

Increased adoption of clean technology leads to positive externalities while improving allocative efficiency through internalizing negative externality costs.

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