4 Green taxes Pigovian Tax a tax enacted to correct the effects of a negative externality Arthur Pigou, 1877-1959 Compare Regulation: not exceed 18 litres/wk Green Tax: $20 for each ton of paper4. Green Taxes ▪ Pigovian Tax ▪ a tax enacted to correct the effects of a negative externality. ▪ Arthur Pigou, 1877-1959 ▪ Compare: ▪ Regulation: not exceed 18 litres/wk ▪ Green Tax: $20 for each ton of paper