, ECS3704
ASSIGNMENT 1 SEMESTER 2
2026
DUE 21 AUGUST 2026
Government Intervention in Pollution from Steel Production
Introduction
Steel production is a classic example of a negative production externality, where the private costs
of production do not reflect the full social costs imposed on society. The production process emits
various pollutants including carbon dioxide, sulfur dioxide, and particulate matter, which harm
human health, damage ecosystems, and contribute to climate change. This market failure
necessitates government intervention to achieve allocative efficiency and protect social welfare
(Estian Calitz et al., 2023:49).
Diagram 1: Negative Production Externality in Steel Production
ASSIGNMENT 1 SEMESTER 2
2026
DUE 21 AUGUST 2026
Government Intervention in Pollution from Steel Production
Introduction
Steel production is a classic example of a negative production externality, where the private costs
of production do not reflect the full social costs imposed on society. The production process emits
various pollutants including carbon dioxide, sulfur dioxide, and particulate matter, which harm
human health, damage ecosystems, and contribute to climate change. This market failure
necessitates government intervention to achieve allocative efficiency and protect social welfare
(Estian Calitz et al., 2023:49).
Diagram 1: Negative Production Externality in Steel Production
