How Would You Select an Appropriate Policy to Internalize Negative

question 4

Essay

How would you select an appropriate policy to internalize negative externalities associated with pollution? In your answer indicate the information required to internalize a negative externality.How do the transactions costs of exchanging the right to pollute affect the choice of policy? Explain why there would be no negative externalities associated with pollution if the transactions costs of establishing and exchanging the rights to pollute (or to have a pollution-free environment) were zero.

---

Definitions:

Solve

To find an answer or solution to a problem or equation.

Accurate

Free from errors or discrepancies; precise and correct in all details.

Percent

A fraction or ratio expressed as a part of 100.

Increased By

A term indicating that a specific value has been added to an original amount, resulting in a larger sum.