Externalities between two firms can be internalized if: I. The ...

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Externalities between two firms can be internalized if: I. The two firms merge. II. Bargaining costs are zero. III. The externalities affect each firm equally. IV. Marginal costs for both firms are constant. Which statement(s) correctly complete(s) the sentence?
 a. Only II.
  b. All except III.
  c. I and II, but not III and IV.
  d. I and IV, but not II and III

Question 2

Bargaining costs are generally high in cases involving environmental externalities because
 a. there are strong incentives to be a free rider.
  b. many individuals may be affected by the externalities.
  c. it is difficult to measure the costs of the externalities.
  d. all of the above.

[kaykay69]

Answer to Question 1

c

Answer to Question 2

d

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Thank you

[kaykay69]

Happy to help you