Reference no: EM131750363

Negative externalities are production costs that are borne by third parties. In the classic example, such externalities are the effects of pollution caused by steel mills, chemical plants, etc. Of the many proposed taxation policies designed to penalize producers responsible for creating negative externalities, perhaps the most contentious is the "carbon tax". What are the arguments for and against a carbon tax? How would the tax affect the competitiveness of the exports of countries imposing such a tax? What steps would you take to ameliorate negative unintended consequences?