Government Failures Flashcards
1
Q
What is government failure?
A
when the government intervention to correct market failure does not improve the allocation of resources or leads to a worsening of the situation
2
Q
what are the 4 government failures?
A
- Imperfect information
- Conflicting objectives
- Administrative Costs
- Unintended consequences
3
Q
What is meant by imperfect information? (govt failure)
A
- size of externality is hard to quantify
- government provision of goods and services
4
Q
What is meant by conflicting objectives? (govt failure)
A
- governments are politically myopic
- disincentives
5
Q
What is meant by Administrative costs? (govt failure)
A
- value for money
6
Q
What is meant by unintended consequences? (govt failure)
A
- something happens because of a government intervention and can’t be predicted
