To internalise a positive externality, an appropriate public policy response would be to

Question

Quizplus · Accepted Answer

Subsidising the good will lead to an increase in production and consumption of the good creating the positive externality. This will lead to an increase in social welfare as the benefits of the positive externality will be enjoyed by more individuals. Additionally, the subsidy may help to incentivize research and development in the production of the good, leading to even greater benefits for society.

To Internalise a Positive Externality, an Appropriate Public Policy Response