Final answer:
Defining the market as refined petroleum enables the analysis of negative externalities associated with the production and consumption of petroleum products, such as air pollution.
Step-by-step explanation:
In the context of modeling a negative environmental externality, defining the market as refined petroleum means focusing specifically on the production and consumption of refined petroleum products such as gasoline, diesel, and jet fuel. By defining the market this way, we can analyze the negative externalities associated with the extraction, refining, and burning of petroleum products. For example, one negative externality of refined petroleum is air pollution caused by the emission of greenhouse gases, particulate matter, and other pollutants from vehicles and industrial processes.