Positive externality: what should the govt do in the market to internalize it?

[Reina]

Should it tax or subsidize consumers? How much should it tax/subsidize them to achieve social optimum? I have the values, but I am not sure how to calculate this.

Thanks!

[immenseaction528]

Your government is never a positive externality when it comes to economic freedom and social or economic justice. Economic justice is a subjective term or goal tried by both communists and socialists. Socialism sometimes will work in small homogeneous countries like Denmark, Holland, Sweden etc. However, when the government tries to social engineer "economic justice or even distribution of wealth", it will invariably fail. You always end up with to many people in the wagon riding and to few pulling the wagon. Your entire government is "riding" on the backs of the private businesses that bear the tax burden for their free ride. Tell your professor to get his head out of his anus and stop the left wing government control of everything.