How does taxation on a negative externality like copper production help improve market efficiency?

Taxation on a negative externality, such as copper production, helps improve market efficiency by making producers pay for the social costs their activities create. When copper is produced, it can lead to pollution and environmental damage, which affects the health and well-being of the community. By imposing a tax on the copper producers, the government encourages them to reduce their negative impact, as higher costs may lead them to adopt cleaner technologies or produce less copper. This way, the price of copper reflects not just the production costs but also the environmental harm, leading to a more accurate supply and demand balance. For example, if a tax is placed on copper production that accounts for its pollution, consumers may choose to buy less copper or seek alternatives, which ultimately benefits society by reducing harmful effects.