Internalising an externality means

Question

Quizplus · Accepted Answer

Internalising an externality means altering incentives so that people take account of the external effects of their actions, and therefore adjust their behaviour accordingly. Government regulations or taxes may be a way to achieve this, but they do not necessarily eliminate the externality completely. The good does not become a public good, and government regulations might not always be the most effective solution. Thus, option D is the most appropriate.

Internalising an Externality Means