[BUG] peerDependencies not preferred over dependencies when both are present

Is there an existing issue for this?

• I have searched the existing issues

This issue exists in the latest npm version

• I am using the latest npm

Current Behavior

Here is a configuration for the styled-components package.json that I'm testing:

The design goal of this is to provide a dependency version specified by us, but allow it to be overridden by peerDependency in client projects if their installed version is greater than ours. Looking at this RFC that was closed as completed, it seems like this is meant to work in npm. However, both versions are currently installed. Here is an example repo demonstrating the current behavior: https://github.com/quantizor/styled-components-repro

I did an analysis of other package managers like yarn and pnpm, and they both seem to honor peerDependencies as an override over dependencies if both are specified in a library being consumed by a client application.

You can see this in action for the supplied reproduction repository by following these instructions after cloning:

1. Delete node_modules and package-lock.json
2. Run yarn install
3. Observe in node_modules/styled-components that no extra node_modules folder is added

Expected Behavior

If a package declared in both dependencies and peerDependencies, peerDependencies should "win" if a compliant higher version is installed in the client application.

Steps To Reproduce

1. Clone https://github.com/quantizor/styled-components-repro and cd into the directory
2. Run npm i
3. Observe that node_modules/styled-components/node_modules has a duplicated module for postcss (there is a higher version also installed at node_modules/postcss)

Environment

• npm: 10.2.5
• Node.js: 18.19.0
• OS Name: macOS
• System Model Name: MacBook Air
• npm config:

; node version = v18.19.0
; npm local prefix = /Users/[redacted]/code/styled-components-repro
; npm version = 10.2.5
; cwd = /Users/[redacted]/code/styled-components-repro
; HOME = /Users/[redacted]

Start with the package.json configuration and the styled-components-repro repository, then run npm i and inspect node_modules/styled-components/node_modules alongside the top-level node_modules/postcss. Done means a compliant higher peerDependency is used instead of installing a duplicate dependency, matching the behavior described for yarn.