When private solutions to externalities are not feasible:
A)public regulation is the remedy, since transaction costs in the public sector are always lower.
B)regulatory activity could represent a viable practical response.
C)the economic entities need to be subjected to public scrutiny.
D)public regulation is always called for.

Question

Quizplus · Accepted Answer

When private solutions to externalities are not feasible, regulatory activity could represent a viable practical response. While public regulation may not always be necessary, it can provide a way to internalize external costs or benefits and ensure that economic entities are held accountable for their actions. However, regulatory approaches must be carefully designed to minimize unintended consequences such as the creation of new externalities or excessive bureaucratic costs.

When Private Solutions to Externalities Are Not Feasible