Efficiency argument in favor of public intervention to mitigate pollution problems are well established. Fundamentally, it is recognized that market failures do occur, with the end result that the true social cost of a product or physical input is not reflected in its price. There failures are termed “externality” an external effect occurs when the welfare of a household depends not only on its own action, but also on the action of others. If the activity imposes an adverse impact on others, it is termed a negative externality. Polluting activities are a prime example of negative externalities.