How do corrective taxes aim to reduce deadweight loss in the market for public goods affected by negative externalities?

Corrective taxes are designed to address negative externalities, which are costs that affect people who are not directly involved in a transaction, like pollution from a factory. These taxes encourage producers to reduce their harmful activities by making them pay for the damage they cause. When companies face higher costs due to the tax, they may produce less of the harmful goods, leading to a better balance in the market. For example, if a factory is taxed for every ton of pollution it emits, it might invest in cleaner technology to lower its tax bill, which helps reduce overall pollution. This process helps to lower deadweight loss, which is the loss of economic efficiency that occurs when the equilibrium outcome is not achievable or not achieved.