Government failure

Question 1

Causes of government failure

Answer 1

• Policy leads to greater inequality
• Regulatory capture
• Failure to do due diligence
• High enforcement costs
• unintended consequences
• Conflicts/trade offs with other aims

Question 2

Scottish rent cap facts + potential effect

Answer 2

• The Scottish government introduced a rent increased cap in rent housing and pause on some evictions from 2022 to 2024
  
  • The measures were intended to protects tenants during the cost of living crisis
  • However:
    
    • it could reduce the amount of supply of houses as land lords make subnormal profits
    • Fall in the quality of stock of rented housing as landlords look to cut costs. This can lead to negative externalities such as tenants experiencing worsening health + limits progress in reducing carbon emissions.

Question 3

opportunity cost of policy example

Answer 3

Benefit cost ratio: in 2010 it was 2.5 from the Command paper, however it reduced to almost just about 0.5 benefit in 2019, from the Berley Review- (ifG)

France £50m per mile- but the HS2 from london to Birmingham is £365m per mile

Could have spent on NHS or crumbling schools?

Question 4

Example of regulatory recapture

Answer 4

Tinkering of plants to HS2, chilton railways are underground to preserve sight for houses for MPs