The parties involved in an externality have an incentive to reach an efficient solution because

1 answer:

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The parties involved in an externality have an incentive to reach an efficient solution because all involved are better off when an efficient solution is reached.

An externality is a benefit or cost that affects someone who is not directly involved in the production or use of a good or service. When the solution is solved everyone has a better chance of reaching their goals due to the solution being found.

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