One reason that private solutions to externalities do not always work is that
A)government intervention negates the benefits of positive externalities.
B)some people benefit from externalities.
C)interested parties incur costs in the bargaining process.
D)charities are not well organized.

Question

Quizplus · Accepted Answer

Private solutions to externalities, such as negotiation and contracts, can be difficult to implement because interested parties must agree upon the terms of the agreement and may incur costs in the bargaining process. Additionally, some parties may not be willing or able to participate in negotiations, leading to incomplete solutions to externalities. Therefore, private solutions may not always work effectively to address externalities. Government intervention, on the other hand, can provide a more efficient and comprehensive solution to externalities by imposing taxes or regulations that internalize the costs of the externality.

One Reason That Private Solutions to Externalities Do Not Always