Negative externalities of production and common pool resources
International Agreements: when a variety of countries sign agreements to prevent the threats to common pool resources, such as the environment, the number of human beings involved in the reduction of the production of negative externalities.
Tradable Permits: setting a limit for the amount of common pool resources that can be used by suppliers )such as the amount of fish that fishers are allowed to catch). International agreements include tradable permits, and their effectiveness depends on the inclusiveness of the agreement, the willingness of producers to assume the additional production cost and the strength of the punishments.
Carbon taxes, imposed on fossil fuel suppliers, who have to pay the cost of their production. This tax does not completely reduce the welfare loss, but it does decrease the production of negative externalities
Regulation/legislation, creating laws to charge or ban demerit goods, as well as limit their production; this solution can lead to over and under-regulation due to the excess of changes in the markets. Excess regulation makes domestic firms less competitive abroad,
Subsidies, promoting the use of positive alternatives for demerit goods. Nevertheless, there are sector (like the energy sector) that are rapidly growing, and cheaper alternatives are more efficient to cover for increasing needs.
Collective self-governance, where communities share their common pool resources and work together alongside top-down regulation to manage their resources; a great strength is that communities who use the resource develop the rules, and the users who follow them are related with their establishment, making them more likely to follow rules.
