Question

Do you consider it necessary for the government to always intervene to internalize the benefit and cost of externalities? Illustrate your answer with a real-world example.

Answer 1

Answer) When we talk about externalities especially the costs we have to take into account that most organizations will avoid it because they look at profits and topline and not at negative externalities which means government has to intervene in most of the cases to reign in organizations ,when we talk about examples we have to look at examples of industries which have led to contamination of water bodies or companies which have sacrificed environment efficient practices in order to improve their profits,has environmental degradation decreased over past decades, answer is no ,when one look at self correcting actions, examples are rare,thus government in most of the cases has to intervene to internalize these benefits and costs of externalities.

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