Consider the production of paper in some town

Consider the production of paper in some towns. Suppose that the supply of paper is upward-sloping and the demand for paper is downward-sloping. If the production of paper causes a negative externality of $0.75 per ream (because the smell of the paper production process in this town is both strong and horrific) and the conditions outlined by the Coase Theorem do not hold, by how much does the optimal price per ream of paper differ from the market price per ream of paper h. The optimal price is higher than the market price. but by less than $0.75 .

It is because as the Coase theorem does not hold, the social marginal cost is greater than the private marginal cost by $0.75 due to the presence of negative externality. It implies the prevailing of optimal equilibrium at the price which is higher than the market price, but obviously, the difference will not be of exactly $0.75. Rather it would be of less than the $0.75 as demand and supply are not consisting of the nature of perfectly elastic or perfectly inelastic.