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Externalities: Problems and Solutions

Externalities: Problems and Solutions

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EXTERNALITY THEORY: ECONOMICS OF NEGATIVE CONSUMPTION EXTERNALITIES Negative consumption externality: When an individual’s consumption reduces the well-being of others who are not compensated by the individual. Private marginal cost (PMB): The direct bene t to con-sumers of consuming an additional unit of a good by the con-sumer.

  Economic, Externalities

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