Acid a classic negative production externality As a by-product of rain is their production, power plants in the Midwest damage the quality of life along the east coast of the United States. Private-sector (Coasian) solutions are unavailable because of the problems noted in the previous chapter, such as negotiation difficulties with hundreds of polluters and millions of affected individuals. Thus, government intervention is required to address this exter- nality. In fact, the government has intervened to reduce acid rain for over 30 years. The story of this intervention and the effects it has had on the envi- ronment, on health, and on the economy provides an excellent example of the sibilities and limitations of government policy toward the environment.