Scott Stewart, Chapter 3, Question 4

In the book the author brought up the problem of externalities. He provided 3 different ways externalities can be dealt with. First, the party being affected pays the party that is affecting them. For this the author gave the example of him paying his neighbor to stop playing the bongos, and this can only happen if Stuart, his neighbor, has the right to play bongos in the first place. Second, His neighbor Stuart could pay the author in order to play the bongos, and this would only happen if the author had the right to silence. Finally, the government can put law in place to limit or stop externalities.

another problem he brought up is how people hate the government, however he proved that it was necessary for any market economy to survive.