One way to solve negative externality problems is
A)to organize a limited boycott of the products.
B)subsidize the externalities.
C)eliminate transactions costs when property rights are not legally established.
D)issue marketable permits to polluting firms.
E)establish and enforce patents and copyrights.

Question

Quizplus · Accepted Answer

Marketable permits allow polluting firms to continue their operations by paying for the right to pollute, but at a diminishing level. As the total number of permits is reduced over time, the price of permits will increase, motivating firms to reduce their pollution to avoid the higher cost of purchasing additional permits. This approach to pollution control provides a flexible mechanism for achieving a given level of pollution reduction while allowing firms to minimize their compliance costs.

One Way to Solve Negative Externality Problems Is