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One way of addressing a situation of a negative international externality would be for a multinational authority to: a
One way of addressing a situation of a negative international externality would be for a multinational authority to:
a. Implement policies aimed at boosting demand for the item creating the externality,
b. Subsidize consumption of the item creating the externality,
c. Tax producers of the item creating the externality,
d. Expand production of the item by having governments provide more units.
Expert Solution
c. Tax producers of the item creating the externality
The imposition of taxes leads to a reduction in the consumption of goods, which generates negative externality. Therefore, one solution for addressing this problem is the levying of taxes on the producers.
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