‘The economy and the environment’ explains some basics of economics, including market failure and negative externalities, and shows how they can affect the environment. Much of economic justification for public policy action is concerned with repairing the underlying causes of market failure. Pollution is an example of a negative externality, where person A's actions cause harm to the interests of person B. Case studies of the 1952 London smog and Rachel Carson's Silent Spring, which highlighted the effects of DDT on wildlife, are discussed. Without some form of public intervention and government regulation to regulate the level of pollution, the socially optimal level of pollution control is unlikely to be achieved.