If taxpayers are forced to pay for the schools needed to meet the needs created by a new real estate development in an area,

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Quizplus · Accepted Answer

When developers create new real estate developments, they are creating a need for schools in the area, which is a negative externality. However, if taxpayers are forced to cover the cost of building the schools needed to meet this need, the developers have transferred the cost of the negative externality onto taxpayers. In other words, the developers are not paying for the cost of the schools and are not taking responsibility for the impact of their actions on the community. This is an example of a negative externality being internalized by the public, resulting in a transfer of the externality's cost to taxpayers.

If Taxpayers Are Forced to Pay for the Schools Needed