25) Government failure Flashcards
1
Q
What is government failure?
A
Government failure occurs when a government intervention (to correct a market failure) results in a net loss of economic welfare
2
Q
Why might government failure occur?
A
1) Distortion of price signals
2) Unintended consequences
3) Excessive administrative costs
4) Information gaps
5) Conflicting objectives
6) Public choice theory
3
Q
What is public choice theory?
A
Theories about how and why public spending and taxation decisions are made
