Question

When considering policies aimed at correcting the externalities, is the goal of these policies to eliminate pollution? Explain.

Answer 1

The goal of the externality is not to reduce the pollution completely but to a great extent such that the externalily can be corrected. For example when there is a negative externality pollution, In order to correct the negative externality there would be a tax imposed on the producers so that the supply would shift to the left and because there is a decrease in supply the production is less which means the pollution levels decreased and the government can get tax revenue and the society is also benefited with company still continuing operations.

However if the goal is to eradicate pollution that wouldn't be any chance for the company to survive and that is the reason why complete eradication is not the goal of government policies on externalities