Should the government intervene in cases of market failure

The benefits of government intervention are largely dependent on the type of government intervention and the form of market failure it hopes to correct, however it is normally beneficial for the government to intervene when market failure arises. There are many forms of government intervention in a market for example, introducing taxes or subsidies, creating price flaws and price ceilings and banning the sale of the product. When the market fails it usually results in negative impacts for society whether this be negative externalities or lack of consumption, and therefore should arguably be corrected. Due to the nature of markets it is likely that it will be corrected by anything but the government and therefore in most cases the government should intervene when markets fail.

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Answered by Gabrielle F. Economics tutor

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