An individual firm will not normally have any Incentive to internalize external costs because to do so would;

Question

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Internalizing external costs would increase the production costs for the firm, putting it at a competitive disadvantage compared to rival firms that do not internalize these costs. In a competitive market, customers will typically choose the lower-priced product, and if a firm internalizes the external costs, it will have to increase the price of its products to cover those costs, making it less competitive. Therefore, an individual firm will not normally have any incentive to internalize external costs.

An Individual Firm Will Not Normally Have Any Incentive to Internalize