Achieving the Socially Optimal Output Internalizing an externality involves altering incentives so that people take into account the external effects of their actions H arc Inc items and derived items copyright o 2001 by Harcourt, IncHarcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Achieving the Socially Optimal Output Internalizing an externality involves altering incentives so that people take into account the external effects of their actions