Assuming a negative externality, the price of a good will be lower than if the price was set in a competitive environment without an externality.

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In a competitive environment without an externality, the price is determined by the intersection of the demand and supply curves. If there is a negative externality, the social cost is higher than the private cost, and the demand curve shifts leftward. This results in a higher equilibrium price and lower quantity demanded than in a competitive market without an externality.

Assuming a Negative Externality, the Price of a Good Will