Kelly owns a power plant in the city of Springfield. The market price of electricity in Springfield is $1.00 per kilowatt hour (kwh). Kelly's marginal costs of electricity production are MC=.5+0.025Q, where Q is the number of kwh generated.

Steve owns a laundry service that operates next door to Kelly's power plant.Steve's specialty in town is the "spring fresh" scent he achieves by air-drying laundry outside.In producing electricity, Polly also produces smoke.Unfortunately, Kelly's smoke dirties Steve's laundry, creating costs for Jack of $0.25 for each kwh Kelly produces.

Suggest at least possible solutions to the market failure in this situation (policy suggestions)