Regulation of activities that cause negative externalities
- Created by: 3arwakhare
- Created on: 17-06-19 11:44
Regulation of activities that cause negative externalities |
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EvaluationRegulation would shift the private cost curve to the left, bringing it closer to the social optimum, and hence correcting the market failure (assuming that there is not a lack of competition in the market; the shift of the supply curve to the left may encourage the chances of imperfect competition which is another cause of market failure). This may only be effective in the short run, as firms may find other ways to trade their goods and services, therefore just regulation may not be enough to deter firms from generating negative externalities. |
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