When there are significant costs involved with coordinating a private solution to an externality:
A)a leader will likely be elected to organize the coordination.
B)these costs can act as a motivating factor to solve the externality problem expediently.
C)a private solution likely will not occur.
D)None of these are true.

Question

Quizplus · Accepted Answer

When significant costs are involved with coordinating a private solution to an externality, these costs can deter the parties involved from coming to a private agreement, making it unlikely that a private solution will occur. This is because the high costs of coordination, negotiation, and enforcement can outweigh the benefits of solving the externality, leading to inaction.

When There Are Significant Costs Involved with Coordinating a Private