Firms have an incentive to externalize their costs, that is, to make others face the opportunity costs
Question:
Firms have an incentive to “externalize” their costs, that is, to make others face the opportunity costs of their actions while firms reduce their own accounting costs.
a. Give some examples of firms doing this.
b. What implications for policy does it have?
(Institutionalist)
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Examples of Firms Externalizing Costs Firms often externalize their costs in various ways to shift the burden onto others while reducing their own expenses Some common examples include Environmental P...View the full answer
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