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IIRC, Greenhat had an excellent proof of how the market actually internalises externalities such as pollution.
IMO, however, the market-based solution is reliant on the perceptions of the people (ohmygod, acid rain/no air/no food etc) and will therefore begin to regulate itself only when very dramatic environmental problems start occuring. This will likely be too late for the companies to reverse the effects of their products and/or creation of output.
Solid
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