Explanation:
The negative externalities such as pollution which is the most common externalities of the companies is handled by the government using the pollution taxes. By increasing the taxes for companies making pollution the product prices will increase and the demand for those products will decrease.
Landfill is also increasing over the years by manufacturing companies. Government imposes landfill taxes to these companies. So the companies try to recycle the rubbish by themselves than dumping in public property.
Plastic bag tax is another tax that is implemented on the business providing free bags for the customers. This is an additional cost to business so they use recyclable bags or paper bags.
So by imposing regulations, taxes and laws government is able to control negative externalities.
