Governmnet failure Flashcards
What is Government Failure?
When economic intervention leads to an outcome that reduces overall economic welfare
What are some key intervening bodies?
CMA (UK) and European CompetitionCommission
How are distortion of price signals a government failure?
Price control / subsidies lead to overproduction or underproduction, for example rent controls are a price ceiling, discourage landlords from maintaining rent properties
How are uninteded consequences a cause of Gov failure?
Inadvertently creates new problems, for example cash transfer programmes to reduce poverty might discourage work leading to reduced labour force participation
How are excessive administrative costs a cause of gov failure?
Administrative costs arise in the healthcare industry limiting the resources available for patient care
How are information gaps a cause of government failure
Regulators lack data on pollution sources, environmental policies fail to target the most significant pollution contributors effectively
How did the EUs Common Agricultural Policy of price supports lead to market failure?
Overproduction of goods such as butter and wine - environmental degradation
How did rent controls in San Francisco lead to government failure?
Shortage of housing supply and soaring costs for non rent controlled properties
