question archive If Congress could declare illegal any activity that imposes external costs on others, would such legislation be advisable?
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If Congress could declare illegal any activity that imposes external costs on others, would such legislation be advisable?
No.
There are other ways the Congress can use to deal with activities that result in external costs rather than declaring them illegal. For instance, exhaust from vehicles pollutes the environment. Does it mean that the Congress should totally ban the use of vehicles? The Congress should impose a tax on activities that generate an external cost to the society. The tax will internalize the externality since it affords the consumers and producers an incentive to consider the external impact of their deeds.