How do increasing cost industries typically maintain a competitive advantage despite facing rising costs, particularly in relation to externalities?

Increasing cost industries often face challenges when their expenses rise, but they can maintain a competitive advantage in several ways. One method is by improving efficiency, which means they find ways to produce their goods or services at a lower cost, even when overall prices go up. For example, a factory might invest in better machinery that uses less energy, reducing production costs in the long run. Additionally, these industries may focus on creating unique products that offer value, allowing them to charge higher prices and keep customers interested. By addressing externalities, such as pollution or resource depletion, they can also enhance their reputation and attract customers who care about sustainability, further strengthening their market position.