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How does the government attempt to encourage positive externalities and limit negative externalities?

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Well on the positive side: government can subsidize flu shots which helps the individual who receives the immunization and the community at large by helping prevent the spread of the flu. On the negative side: government taxes gasoline to help curb some of the problems placed on society by your driving your auto (like congestion, pollution, etc).
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User Sconfluentus
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