The primary problem caused by negative externalities is that they do not fully account for the total cost to society, which is equal to the private costs plus the external costs. Because of this, there are more units sold than are socially optimal. Therefore, negative externalities are corrected for by reducing the amount sold in the market.

Pollution externalities are typically corrected for in one of two ways. First, the government can generate a tax on the product that is being made that results in the pollution. This will, in turn, make it more expensive to produce and sell the product, which results in fewer units produced. Another way is to cap the amount of pollution the firm can actually emit.

For healthcare issues, government regulation is typically needed to force insurance companies to accept patients with pre-existing conditions in their plans also force hospitals and doctors to treat these patients with some form of care.

For poverty and economic inequality, transfer programs (such as food stamps, Welfare, and Medicaid) are all ways to distribute income to lower income individuals.