Economists typically suggest three choices that allow a polluter to decide how to absorb most, or perhaps all, of the social costs of its actions, which are

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The most effective choices for a polluter to absorb the social costs of their actions would be to reduce the pollution-causing activity, change production techniques, or pay a price to pollute. By reducing the pollution-causing activity or changing production techniques, the polluter is able to produce their goods while minimizing their negative impact on the environment. Alternatively, paying a price to pollute can create an incentive for the polluter to reduce their output or invest in cleaner production technologies. Options A, C, and D either do not address the root problem of pollution or do not create enough of an incentive for the polluter to change their behavior.

Economists Typically Suggest Three Choices That Allow a Polluter to Decide