How can per unit subsidies help mitigate negative externalities in a market economy?

Per unit subsidies are payments made by the government for each unit of a good or service produced or consumed. These subsidies can help reduce negative externalities, which are harmful effects on third parties that happen when goods are produced or consumed. For example, if a factory pollutes the air while making products, a per unit subsidy for cleaner production methods can encourage the factory to adopt greener technologies. This way, the factory benefits financially for reducing pollution, leading to a healthier environment for everyone. By making cleaner options more affordable, per unit subsidies can effectively guide businesses and consumers toward choices that are better for society as a whole.