Junko's car dealership has been suffering from dust on the cars in its lot ever since Mak opened his bakery nearby. The bakery's flour deliveries send waves of dust down the block. Junko offers to cover half of the cost of Mak adding a shelter for his delivery area to reduce the blowing of flour dust toward the dealership. This is an example of reducing a negative externality through:

Question

Quizplus · Accepted Answer

Private bargaining involves individuals or firms directly negotiating and making agreements to address externalities. In this case, Junko is offering to pay for part of the cost of a shelter for Mak's bakery delivery area, which will reduce the negative externality of the flour dust and benefit both businesses. This is a voluntary and mutually beneficial solution that does not require government intervention or regulation.

Junko's Car Dealership Has Been Suffering from Dust on the Cars