The vaccine is imported from a competitive foreign market where it sells for $10/dose. Production of the vaccine produces water pollution (an external cost) that does an average of $2 worth of damage per dose of vaccine produced. The pollution only affects people that live close to the production plant. The cost of shipping the vaccine is $1 per dose. The vaccine is imported by a domestic firm that has the sole rights to import the vaccine. This firm buys the vaccine at cost and sells it for $15 per dose.
When the product is produced in foreign country, and lead negative external cost to the foreigners, should we consider the external cost a cost or transfer if the affect people in foreign country have standing?