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Carbon Tax
A carbon tax is a Pigouvian tax levied on the carbon content of fossil fuels, charging emitters a set price for each tonne of carbon dioxide (or equivalent greenhouse gas) released. By adding the external cost of emissions to the private cost of production, it raises marginal private cost toward marginal social cost, giving firms and consumers an ongoing incentive to cut emissions and switch to cleaner alternatives.
Collective self-governance
The situation where a common pool resources are given to the control of individuals for them to manage it in a sustainable manner.
Common Pool Resources
Natural resources which are available for use for everyone, but are susceptible to overuse and depletion.
Pigouvian taxes
Form of tax imposed on activities that generate negative externalities.
Tradable Permits
A legal cap set by the government, limiting the amount of emissions that can be emitted. Each firm are provided a set of permits, which can be exchanged with other firms.