Government solutions to externality problems include:
I. Pigouvian taxes.
II. tradable allowances.
III. command and control.
A) I only
B) I and III only
C) II and III only
D) I, II, and III

Question

Quizplus · Accepted Answer

Pigouvian taxes are used to address negative externalities by imposing taxes on activities that generate harmful spillover effects. Tradable allowances allow industries to trade pollution permits, which incentivizes companies to reduce pollution and to sell excess pollution permits to other companies that need them. Command and control regulations are government mandates that impose specific regulations on businesses to reduce externalities. All three of these solutions can be used in combination to address externality problems effectively.

Government Solutions to Externality Problems Include