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When a celebration, say a manufacturing facility causes a destructive production externality say pollution, the agency won't take into account this external Price tag in the form of air pollution even though calculating its profits/losses.
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As an example: if there is generation of a market place of air pollution via assignment of crystal clear residence legal rights wherever an individual owns a river and possess a correct to clean waters, then he can cost corporations for causing air pollution in his river by charging a price equivalent to marginal exterior cost due to for every device of pollution (a detrimental manufacturing externality).
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