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.

GF
Answered by Gabrielle F. Economics tutor

6987 Views

See similar Economics IB tutors

Related Economics IB answers

All answers ▸

What is the definition of demand?


Consider a competitive market, that has recently had an ad valorem sales tax imposed. Show this on a diagram. What is the impact on the market equilibrium? If the demand curve becomes more inelastic, which side of the market suffers more?


What are the non-price determinants of demand?


How can I achieve a top grade?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

© MyTutorWeb Ltd 2013–2025

Terms & Conditions|Privacy Policy
Cookie Preferences