Section 3
Government Policy Options
Book
Version 3
By Boundless
By Boundless
Boundless Economics
Economics
by Boundless
3 concepts
![Thumbnail](../../../../../../figures.boundless-cdn.com/20467/square/7137645351-43b45d9883-o.jpeg)
Regulation
The government can respond to externalities through command-and-control policies or market-based policies.
![Thumbnail](../../../../../../figures.boundless-cdn.com/20058/raw/social-cost-with-tax.jpg)
Tax
Corrective taxes incentivize economic actors to reduce the production of goods or services generating negative externalities.
![Thumbnail](../../../../../../figures.boundless-cdn.com/20062/square/ower-plant-datteln-2-crop1.jpg)
Quotas
Tradable permits are a market-based approach allowing the government to limit negative externalities produced by a group of firms.