The divergence of private and social costs is problematic because the divergence means that price no longer accurately reflects all of the costs of a commodity. This means that resources are not being allocated efficiently, and society's welfare consequently declines. The divergence of private and social costs is problematic because the divergence means that price no longer accurately reflects all of the costs of a commodity. This means that resources are not being allocated efficiently, and society's welfare consequently declines.

When markets do not take all costs into account, more of a commodity will be produced than society would demand if it could measure what it is actually paying for the commodity. (Like no incentive to use technology to reduce or eliminate pollution).

In addition, producers ignore these costs and do not try to minimize them. Since goods are no longer efficiently distributed to consumers, pollution violates the utilitarian principles that underlie the market system. (Like living close to a power plant). In addition, producers ignore these costs and do not try to minimize them. Since goods are no longer efficiently distributed to consumers, pollution violates the utilitarian principles that underlie the market system. (Like living close to a power plant).

Remedies The remedy for external costs, according to utilitarian, is to internalize them to ensure that the producer pays all of the real costs of production and uses these costs to determine the price of the commodity.

Remedies One way is to pay cost by polluting agent voluntarily or legally. An amount equal to the harms done (Union oil case). To internalize the costs of pollution, a firm may be required to pay all those harmed by pollution. One way is to pay cost by polluting agent voluntarily or legally. An amount equal to the harms done (Union oil case). To internalize the costs of pollution, a firm may be required to pay all those harmed by pollution.

A problem with this way of internalizing the costs of pollution, however, is that when several polluters are involved, it is not always clear just who is being harmed and by whom. Alternatively, the firm might install pollution control devices and stop the harm at its source. A problem with this way of internalizing the costs of pollution, however, is that when several polluters are involved, it is not always clear just who is being harmed and by whom. Alternatively, the firm might install pollution control devices and stop the harm at its source.

This way of dealing with pollution is consistent with the requirements of distributive justice. Since pollution's external costs are largely borne by the poor, pollution produces a net flow of benefits away from the poor and towards the rich. Internalizing these costs can reverse this flow. This way of dealing with pollution is consistent with the requirements of distributive justice. Since pollution's external costs are largely borne by the poor, pollution produces a net flow of benefits away from the poor and towards the rich. Internalizing these costs can reverse this flow.

However, if a firm makes basic goods, such as food, then internalizing costs may place a heavier burden on poorer people.

Justice Internalizing external costs is also consistent with retributive and compensatory justice, because those who are responsible for pollution bear the burden of rectifying it and compensating those who have been harmed.

Taken together, these requirements imply that: a)The costs of pollution control should be borne by those who cause pollution and who have benefited from pollution activities. Taken together, these requirements imply that: a)The costs of pollution control should be borne by those who cause pollution and who have benefited from pollution activities.

b)The benefits of pollution control should flow to those who have had to bear the external costs of pollution. Internalizing external costs seems to meet these two requirements: