I am unsure of how to think about this negative externality question when there is both tax and free trade.
A country is producing plastic, but it has a negative externality cost of 4 dollars/bottle. The demand is $Q_D=12-P$ and the supply is $Q_S=P$. If a 4 dollars/bottle tax is enacted and the country is opened up to free trade with a world price of 4 dollars, what would the total social surplus be? Based on my calculations, it would be 24 dollars, just the same as when the country has no tax and is open to free trade. Is this correct thinking? Or am I not thinking about the tax and free trade correctly? Thanks.