T8 - gov failiure Flashcards
What is gov fialiure
Wehn gov intevrention leads to a recution in eco welfare, leadign to allocation of resoruces whcih si worse than the free market outcome
Types of gov fialiure
Lack of incetnives
Porr info
Political inetrference
No consitencu
Moral hazard
regualtory capture
Unintteneded consequences
exampels of when gov should intervee
public and merit goods
dealing with inequality
monopsony and monopoly pwoer
when should the gov intervene
on things that will benefit society or where market forces wont be strong enough to deal with the issue
why should the gov not intervene
government failirue
advaatges fo the free market and market forces
profit motive
competition
efficnecy
alloctaes scarce resources well
price mechansim functioning
disadv of market forces
likely to cause all of PIMMFACED to some extent
what does poor info mean for gov failiure
policy makers may not hae fully inforamtion, especsially when valuing externalitites
wehn are high costs of gov int likely to be an issue
susbside
regualtion
stae provsion
price control
if gov cant enforce regualtio what will happen
peopel will go against themknwoign no punsihment
unintended conssequnces of governemnt failiure
black markets
innefficency of firms
ineuqality (regressive shit)
macro conflict
exampel fo damages to the poor and shit for gov failiure
when regressive shit si in palce and say min prices, emanign they cant afford, hence increasign inequality
how ay gov failiure be cuased by impacts on firms
lack of efficnecy
firms dependent
too high costs
when coudl you argeu inflation as a gov failiure
rasising taxes
min prices
when woudl unemployemtn be caused due to gov intevrention
any shit that causes costs to icnrease or demand to fall
whats alwasy a good way to evalaute any policy
look at teh unintended consequences shit may cause
examples of unintneded cosneuqnces
cost and inneficicy
inequality
black markets
macro conflict
when does regualtory capture occur
when the ceos inetrest is taken into accoutn mroe than society
lack of incentives meanign in gov failiure
where the intevrnetion doesnt incentiveise indivudals enough to change behavours
causes firms to become innefficint
how does poor information lead to gov failiure
policy makers dont knwo enough about the idnrusty, for exampel say taxes on a monopoly btu the good is inelastic, few susbtutues, elading to just higher prices anyway
how can moral hazard cause gov failiure
as idnivudals may take greater risks kwnoing the gov will look after tehm and bear teh costs
examples of moral hazard causing ov failiure
when banks take risks as they know they can get bailed out by gov
how does lack of cosnsiency and political oinetrference cause gov failiure
only short term beenfits cosnidered for the next election and parites may change
examples of lack of cosntency causing gov failiure
say EU, the idea was done for policial votes and shit, but now causing mroe expensive improts damaging society etc
how can gov failiure be overcome
perofmance tagrets to create icnentives
publci private ownership
roles to non politcal bodies
examples of incentivs that coudl eb put in place
performance requiremnets
non hourly pay sturctures
non monetary perks
improve working condtitons
exampel fo a macro consequence emaning gov failiure
any that
reduce demand
rise prices
rises costs o fproduction
gov failiure due to taxes
objective conflict
inequality
reduced lviing standards
black markets
susbidise and gov failiure
inneficincy
complacent firms
reagualtion adn gov failiure
inc costs and inefficny
macro conflict
regualtory capture
not being enforced
information and gov failiure
not good enough
polic amkers dont knwo enough them self
undedcuated poeple
max price and gov failiure
firms at a loss
decrease incentives
innefficncy
min price adn gov failiure
innefficncy
inequality
permits and gov failirue
higher cosst
monopoly just buying them
objectiev conflict
can cause inequality
state aid provision and gov failiure
damag to bduegt defifcit
inefficciny and lack of incetives
poltical inetrfeences
natiaonlsiation adn gov failiure
political interference
no incentives and efficney
burden on bydget
information failiure
good way to evalaute gov itn methdos
just look at teh nagetaievs and fucking oevr exagerate them to uck adn link them to unitnended cosnequces
hwo do high admin costs cause gov failiure
leads to lack of enforcement
leads to rising taxes
leads to less gov spending
what is a dead weight loss area
the loss of consumer welfare and society due to market innefficency
when is a dead weight lsos area created
when prices are rised
what si teh deadweight loss area on the graoh
the traingle and diff between the the old quantity and new quantiy on a graph
