Externalities can justify government intervention Without externalities,economic theory says that markets reach an efficient outcome Taxes subsidies only distort the efficient outcome With externalities,government responses may help the market reach a socially desirable state Ex:Public health efforts,like flu vaccination campaigns or quarantines to combat deadly diseases like Ebola virus Bhattacharya,Hyde and Tu-HealthEconomicsBhattacharya, Hyde and Tu – Health Economics Externalities can justify government intervention  Without externalities, economic theory says that markets reach an efficient outcome  Taxes & subsidies only distort the efficient outcome  With externalities, government responses may help the market reach a socially desirable state  Ex: Public health efforts, like flu vaccination campaigns or quarantines to combat deadly diseases like Ebola virus