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Jesus Corredor
on Nov 05, 2024

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Subsidies can be used to internalize positive externalities.

Positive Externalities

Benefits experienced by third parties or society at large from an economic transaction, such as improved public health or education levels, not reflected in market prices.

Subsidies

Financial support from the government to businesses, individuals, or other governmental bodies to encourage or maintain an activity that has a public good.

  • Recognize the role of government interventions, such as subsidies and taxes, in internalizing externalities.
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