Solutions to negative externalities:

1. In the case of multiple uses and usage methods, both parties must compromise with each other until they reach the minimum level where they can mutually accept each other. But the premise of this method is that the purposes and methods of use of the two are compatible. For example, in the same space, someone is playing music and someone wants to read a book.

If the two can be compromised, the music player can turn down the volume, or the reader can play music that is acceptable, then both can survive. However, this solution can only be carried out when there are only a small number of members. If there are many members, the transaction costs between each other will be very high.

2. Replace the subject. When there are multiple public resources with the same conditions, parties with the same use methods can be placed under the same public resource. In other words, there is only one purpose and use method in a dedicated place and cannot be used. For other purposes. Take the examples of sewage treatment and fish farming. You can designate a dedicated pond for fish farming and another for sewage discharge. This does not exactly equal the privatization of property rights.

3. Specify the purpose and use method under certain conditions. That is, the purpose and use method of the public resource are stipulated, and there can only be one purpose under certain conditions. For example, in congested areas, cars drive according to the odd and even time slots of their license plates.

Extended information:

Characteristics of negative externalities:

1. The premise of Pigou theory is that there is a so-called "social welfare function", and the government is a public A natural representative of public interests, and able to consciously intervene in economic activities that generate externalities in accordance with public interests. However, in fact, there are great limitations in public decision-making.

2. The premise for the application of Pigovian tax is that the government must know the marginal costs or benefits of all individuals that cause externalities and are affected by it, and have all information related to determining Pareto optimal resource allocation. Only in this way can the government set optimal tax rates and subsidies. However, in reality, the government is not omnipotent and cannot have enough information. Therefore, in theory, the Pigouvian tax is perfect, but the actual implementation effect deviates greatly from expectations.

3. Government intervention itself also costs money. If the cost of government intervention is greater than the losses caused by the externality, it is not worthwhile to eliminate the externality from the perspective of economic efficiency.

4. Rent-seeking activities may occur during the use of Pigovian tax, which will lead to waste of resources and distortion of resource allocation.