Which of the following will lead to an efficient private solution if negative externalities are present in a market?
A) The government paying a subsidy to the parties involved in generating externalities
B) The party creating the externality having legal property rights
C) The party suffering from the externality having legal property rights
D) The parties involved negotiating with each other and reaching an agreement

Question

Quizplus · Accepted Answer

The parties involved negotiating with each other and reaching an agreement is the best option for an efficient private solution in the presence of negative externalities. This is because it allows the parties to directly address the externality and come up with a mutually beneficial solution. Options A, B, and C all involve external intervention and may not necessarily lead to an efficient outcome.

Which of the Following Will Lead to an Efficient Private