Littering, the improper disposal of small quantities of waste, is one of the main causes of environmental degradation. To protect the environment from this degradation, we need to factor out the determinants of littering behaviour. In this study, we conduct a controlled laboratory experiment to examine whether people would avoid littering if the social cost of this behaviour was internalised. Based on the microeconomic theory relating to externality, we test whether penalising littering decreases its level compared to when it is not.. The results indicate that when the cost of production of littering is internalised, the level of littering drops. JEL Classification: C92, D62 Keywords: Litter, Externality, Private Cost, Internalisation, Experiment, Baseline Treatment, Cost Treatment