Corrective taxes are fees imposed by governments to address negative externalities, which are costs that affect third parties not involved in a transaction. For example, when companies pollute the environment, the societal costs of that pollution are not reflected in the price of their products. By implementing corrective taxes, governments aim to encourage businesses to reduce harmful behaviors and promote more socially responsible practices. These taxes are designed to align private costs with social costs, making it more expensive to engage in activities that harm the environment or public health. A common example of a corrective tax is a carbon tax, which charges companies for their greenhouse gas emissions, incentivizing them to adopt cleaner technologies and reduce their carbon footprint.