This basically means when somebody other than the consumer or producer is faced with the negative affects. “When there is a negative externality, a tax can lead to economic efficiency” (Hubbard & O’Brien, 2015a). This statement is true because gas will always be in demand and no matter what the tax is people will pay for it. Some ways that this demand can be influenced is by making substitution like the ones stated above, moving closer to work, buying an electric car, or walking. Even though the demand may lower, people will always need gas. However, the amount the consumer uses in gas will still be taxed, which will lead to economic efficiency creating a
This basically means when somebody other than the consumer or producer is faced with the negative affects. “When there is a negative externality, a tax can lead to economic efficiency” (Hubbard & O’Brien, 2015a). This statement is true because gas will always be in demand and no matter what the tax is people will pay for it. Some ways that this demand can be influenced is by making substitution like the ones stated above, moving closer to work, buying an electric car, or walking. Even though the demand may lower, people will always need gas. However, the amount the consumer uses in gas will still be taxed, which will lead to economic efficiency creating a