Question

Say the government establishes rights to pollute so that without a pollution permit you aren’t allowed to emit pollutants into the air, water, or soil. Firms are allowed to buy and sell these rights. In what way will this correct for an externality?.

Answer 1

Answer:

The government will profit from the sale of the permits, but it affects people without the ability to get the permit.

Explanation:

a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of the goods or services involved, such as the pollination of surrounding crops by bees kept for honey.