Microsoft MCITP Certification Exam 70-647

Research on green taxation suggest that during the 1990s there was significant correlation between a country's UN Human Development Index (HDI) rank per fixed amount of GDP, and 70-640 its level of green tax as a percentage of total tax revenues. Furthermore, over periods longer than 5 years, data suggest that countries having higher green tax rates such as Norway, Sweden and Netherlands experience higher GDP growth and higher HDI growth rate.. However, it cannot be confirmed that an increase in green tax rates causes higher GDP growth and higher HDI growth ratesOne can encourage certain behaviors by subsidizing them,70-620 for instance donating to socially beneficial non-profits or installing solar panels to avoid pollution. Such a subsidy of a positive externality can be considered a "negative Pigovian tax".

The motivation for such a subsidy is trying to reach economic efficiency. When a positive externality is present, a firm's solution of its utility maximization problem does 70-647 not account for the additional utility (to another agent) produced as a by-product (the externality), thus causing the firm to produce less than the pareto-efficient level . The Pigouvian subsidy thus internalizes the externality into the agent's utility function, by giving the firm incentive to produce more than it otherwise would.