How does the government intervene to deal with the existence of negative externalities

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Social Studies

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4 August, 20:22

How does the government intervene to deal with the existence of negative externalities

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Haley Waller · Answer 1

Government can play a role in reducing negative externalities by taxing goods when their production generates spillover costs. This taxation effectively increases the cost of producing such goods ... The use of such a tax is called internalizing the externality.