Government intervention will not be necessary when voluntary contracting internalizes an externality. Which of the following is NOT a necessary condition for this to occur?

Question

Quizplus · Accepted Answer

Large numbers of individuals involved in the transactions can actually make it more difficult for voluntary contracting to internalize an externality, as coordinating and reaching an agreement between a large number of parties can be costly and time-consuming. Therefore, having a smaller number of parties involved can facilitate the process of internalizing an externality. The other options are necessary conditions for voluntary contracting to internalize an externality.

Government Intervention Will Not Be Necessary When Voluntary Contracting Internalizes