. Discuss the ways to internalize an externality.

Question

22 Jul 2024

Answer :

Word Count : 299

To internalize an externality means to adjust economic activities so that the costs or benefits of an externality are reflected in the market decisions of individuals and firms. There are several ways to achieve this:

1. Pigovian Taxes and Subsidies: Named after economist Arthur Pigou, Pigovian taxes are levied on goods or activities that generate negative externalities, such as _______ ________ ___ _________ __________ ___ _______ _____ _________ __________.
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