To internalize the external costs of pollution is to:
A) levy taxes on manufacturing firms located in crowded urban areas.
B) auction off pollution rights to those willing to pay the most for them.
C) make the polluter pay all of the costs associated with the polluting activity.
D) require that private citizens rather than taxpayers pay for the harmful effects of pollution.

Question

Quizplus · Accepted Answer

Internalizing the external costs of pollution means making the polluter pay for all costs associated with the pollution. This includes the monetary costs of damage caused to individuals, communities, and the environment. This approach incentivizes firms to reduce their pollution levels since they bear the full cost. Levying taxes may help reduce pollution, but it does not force companies to internalize the external costs. Auctioning pollution rights is another method, but it also does not ensure that polluters pay for all costs associated with their activity. Requiring private citizens to pay for the harmful effects of pollution is unfair since they did not cause the pollution.

To Internalize the External Costs of Pollution Is To