Question

A familiar example of a negative externality is loud music on a college campus. In principle, it should be possible to internalize this externality by permitting students to negotiate rights to play music during particular times. The most likely reason that these negotiations do NOT happen is that?

Answer 1

The answer is that the transaction costs associated with identifying and establishing communication with students would be high.

Step-by-step explanation:

Organizing an effective communication with and between various students and groups is a costly endeavor.