What are the four different approaches to solving the problem of externalities.?

Answer 1

Externalities can arise from the production or consumption of merit and demerit goods. Government can intervene to correct these externalities in a number of ways. Generally through;

1)Internalization
Imposing taxes in the production of demerit goods and subsidies for consumption of merit goods

2)Nationalization
Provision of merit goods by the government (eg Healthcare, Education)

3)Legislation
Restrict the production of goods that yields negative externalities through assigning property rights and pollution permit, or compulsory consumption of merit goods (Eg vaccination)

4)Joint provision
Government supplementing the provision of merit goods that is "under-produced" by the private sector.

Answer 2

Goods and profit generate different equations, the market forces are guilty in this case, stocks and shares are a fourth problem to contend with, every one is moving so you do not have a constant to calculate from. Capital growth is your third consideration to be taken into account! Have a good day.

Answer 3

The theory of the Four Internalities>

Answer 4

Private property and solid tort law would solve most of them.

Answer 5

assign property rights-Coase theorem
tax offending goods
subsidize positive goods
regulate