read the passage and answer the questions in a, b, c

The manufacture of terephthalic acid by ICI produced residues which were disposed of at a landfill site. These residues gave rise to a strong smell causing complaints from nearby residents. ICI have now developed a process for treating the residues and rendering them innocuous while retrieving some valuable constituents. Conversely, air pollution problems can be turned into land pollution problems. The removal of gaseous fluoride from emissions to air by wet scrubbing creates an effluent which is discharged into sewage systems. In one case, sludge from a sewage works was spread on grazing land and this resulted in the cattle developing fluorosis from fluoride-contaminated grass. Imply enormous negotiation costs. It would be open to some residents to hold out for compensation far in excess of their real evaluation of the likely damage, and might well inhibit production altogether. Establishing environmental rights which are enforceable by the individual opens the possibility of endless litigation and enormous negotiation costs.

a) The provision of some services, results in adverse effects being experienced by people who are not directly involved as producers or consumers, explain how external costs arise and the actions that may be taken by those affected by such costs.

b) Investigate the information and monitoring problems which accompany the process of regulation and which influence the bargaining framework.

c) Suggest the instruments observed as part of a regulatory process which involves firms in a continuing bargaining relationship with regulators.