[pjvsvsrtrxc]

The pollution from such a car is undeniably an externality. Just Google "is pollution an externality".

The less efficient engine itself is not because it is priced in. Because the government made them put it on the window of every single car sold.

[wbsss4412]

“Priced in” means that the full social cost is reflected in the price.

A window sticker is not “pricing in” the externality.