So

So, if they continue to sell the same amount of the product on the market with the newly imposed tax, they will be unable to get any more than the old price. Since this price will not compensate them for the now higher costs of doing business, some firms will have to reduce the supply of the goods in question. The exiting of marginal firms from the industry as a result of the higher taxes contributes to the reduction of supply. This highlights the fact that producers do not directly control the prices at which their products will sell. Supply and demand determine the selling prices.