Government Failure
- Created by: Becca_67
- Created on: 29-12-18 09:03
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- Government Failure
- An unintended consequence of government intervention
- Income Tax = disincentive to work hard
- Price fixing = distortion of price signals
- Subsidies = inefficient as the incentive has been removed
- Excessive Government Bureaucracy
- Red Tape can prevent markets working efficiently
- Time Lags give the Country a competitive disadvantage
- lack of investment
- prevent an economyworking at full capacity
- Conflicting Policy Objectives
- achieving one has a negative effect on another
- Governments often favour short term solutions
- Inadequate Information
- Imperfect or Asymmetric
- difficult to asses extent of market failure
- makes it hard to put a value on the government intervention thats needed
- difficult to asses extent of market failure
- Governments may not know how people want resources allocated
- Don't know how consumers might react
- Imperfect or Asymmetric
- Administrive Costs
- Government intervention can use a lot of resources
- Some require policing which can be expensive
- External Shocks
- An unintended consequence of government intervention
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