A private solution to externality.

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Give typing answer with explanation and conclusion Why the market tends to fail when dealing with environmental issues? It is said many externalities in environmental economics have features that are similar to that of public goods. We know that the provision of some public goods such as lighthouse can be solved through the market rather effectively. What makes environmental goods such as clean air different from other public goods such as lighthouse? Why is it more difficult to solve the provision of clear air through the market?

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Chapter 10.3, Problem 3QQ

To determine

A private solution to externality.

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Give typing answer with explanation and conclusion Why the market tends to fail when dealing with environmental issues? It is said many externalities in environmental economics have features that are similar to that of public goods. We know that the provision of some public goods such as lighthouse can be solved through the market rather effectively. What makes environmental goods such as clean air different from other public goods such as lighthouse? Why is it more difficult to solve the provision of clear air through the market?

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The graph below depicts the market for a good with what type of externality present? Price 22 20- 18 16 4 12- 10- co 19090 6 A 2 0 To 0 20 40 60 80 100 120 140 Quantity Social Cost D 160 O Negative production externality Positive consumption externality O Negative consumption externality O Positive production externality Private Cost 180 200