compare the relative merits of different instruments that are designed to internalize externalities? illustrate you answer with reference to environmental policy?
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Government can play a role in reducing negative externalities by taxing goods when their production generates spillover costs. ... So, such taxation attempts to make the producer pay for the full cost of production. The use of such a tax is called internalizing the externality.
Environmental issues typically addressed by environmental policy include (but are not limited to) air and water pollution, waste management, ecosystem management, biodiversity protection, the protection of natural resources, wildlife and endangered species, and the management of these natural resources for future
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