Consider the following supply and demand schedule for steel:
price per ton ($) 20 40 60 80 100 120 140 160 180
Qd (million tons) 200 180 160 140 120 100 80 60 40
Qs (million tons) 20 60 100 140 180 220 260 300 340
Pollution from steel production is estimated to create an external cost of sixty dollars per ton.
From an economic point of view, what is the best solution to this environmental conflict of interest?
How might this solution be achieved?
How should considerations of efficiency and equity be balanced in this case?