Pigovian tax

A Pigovian tax is a type of tax on a market activity that produces things with negative effects.

This concept tries to reconcile both the interests of the producer and the social interests of the consumer.

For example, a producer of plastic bottles only cares about their profits, not on the negative effect that the bottles in the trash may have on nature. Other examples may be unintended consequences from buildings, or the increase of a need for police in areas where there is more consumption of alcohol.

Pigovian taxes are named after the English economist, Arthur Cecil Pigou, who studied and developed the concept of externalities (the concept that some are affected by certain economic activities that they don't participate in) in the economy, in his book The Economics of Welfare.