Which one of the following statements is not correct?

Option (a) is incorrect — the market mechanism UNDER-produces (not over-produces) a good that generates positive externalities, because private producers do not capture the spillover social benefit and hence supply less than the socially optimal quantity. (b) is correct: cap-and-trade is a market-based instrument used to achieve socially optimal pollution levels. (c) is correct: a Pigouvian subsidy equal to the marginal external benefit (difference between social and private benefit at the optimum) corrects the under-production. (d) is correct: tragedy of the commons (overuse of shared resources) is a classic negative externality.