Market-based solutions refer to economic strategies that leverage market mechanisms to address and mitigate externalities, particularly environmental issues. These solutions often involve the creation of incentives, such as taxes or tradable permits, to encourage individuals and firms to internalize the costs or benefits associated with their activities. This approach promotes efficiency by allowing the market to determine the most effective way to allocate resources in the presence of externalities.
congrats on reading the definition of market-based solutions. now let's actually learn it.