Externalities can be internalized through voluntary agreements as long as
A)transaction costs are low relative to expected benefits.
B)transaction costs are high relative to expected benefits.
C)the agreement is a short-run agreement.
D)the agreement is a long-run agreement.

Question

Quizplus · Accepted Answer

Externalities can be internalized through voluntary agreements when transaction costs are low relative to expected benefits. This makes it economically feasible for the parties involved to negotiate and reach an agreement that internalizes the externality.

Externalities Can Be Internalized Through Voluntary Agreements as Long as