In the context of taxation addressing negative externalities, a tax is typically levied to correct the disparity between the marginal social cost and the marginal private cost, thereby reducing _______ in the market.

When a market has negative externalities, like pollution from a factory, it means that the costs of that pollution are not fully paid by the factory. This creates a gap between what society pays for the harm caused, known as the marginal social cost, and what the factory pays, called the marginal private cost. By imposing a tax on the factory, the government can make the factory pay for the harm it causes, which helps to align these costs. This tax reduces the overall quantity of the harmful activity in the market, leading to less pollution. For example, if the government taxes each ton of pollution, the factory may choose to reduce its emissions to avoid paying high taxes, benefiting society as a whole.