What are public solutions to externalities?

• A. Relying solely on market forces and leaving externalities unaddressed for the market to self-correct.
• B. Voluntary contracts, charitable donations, and corporate social responsibility initiatives by firms and individuals.
• C. Private bargaining through assignment of property rights and Coasean negotiations between affected parties.
• D. Government interventions such as Pigouvian taxes, subsidies, regulations, and tradable permits (cap-and-trade).

Answer: (D)