If a person who generates a negative externality incorporates into his or her private cost-benefit calculations the effects that this externality will have on third parties, the externality has been

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When a person incorporates the effects of a negative externality into their private cost-benefit calculations, it means they are taking into account the external costs their actions impose on others. This process is known as internalizing the externality, as they are making the external effects part of their own decision-making process.

If a Person Who Generates a Negative Externality Incorporates into His