(Solved): 9. Private solutions to correct for externalities Consider the following scenario: Suppose that a b ...

9. Private solutions to correct for externalities Consider the following scenario: Suppose that a brewery enjoys a large increase in customers whenever the blues bar next door features a band playing live music, because it can be easily heard from the brewery. The blues bar owner decides to purchase the brewery so that he can internalize this positive externality. Which of the following private solutions resolving the externality of live music took place in this scenario? Moral codes and social sanctions Contracts Charities Integration of different types of businesses through merger or acquisition Keep in mind that sometimes private solutions to externalities are not achieved. For instance, this could occur when one party repeatedly holds out for a better deal. This describes the problem of