There is little incentive for an individual firm to voluntarily internalize its negative externalities because to do so would:
A)cause it to forgo the diseconomies of agglomeration.
B)shift its cost curves downward.
C)put it at a competitive disadvantage compared to rival producers.
D)make it subject to emission or effluent fees.

Question

Quizplus · Accepted Answer

Internalizing negative externalities involves incurring additional costs in order to reduce the negative impact of the firm's actions on the environment or society. This would increase the firm's costs of production and put it at a competitive disadvantage vis-à-vis other producers who do not internalize their negative externalities. Therefore, there is little incentive for a firm to voluntarily internalize its negative externalities.

There Is Little Incentive for an Individual Firm to Voluntarily