Firms in any industrial structure can generate externalities, both positive and negative. Perfectly competitive firms which don't generate externalities produce the socially or allocatively efficient amount of output; while firms in other industrial structures produce less than the allocatively efficient amount.

   The amount of allocative inefficiency due to externalities will be different depending on whether the generating firm is in a perfectly competitive industry or an imperfectly competitive industry (monopoly, monopolistic competition, oligopoly).

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