•Every policy has itsdisadvantages•E.g. Indirect taxation of demeritgoods•E.g. Regulation of monopolies•These are not examples of government failure.
•Problems caused bythe government itself
•This is what is known asgovernment failure.
What is the main objective of governments?
•What an economist would say:•“In fact, governments have two objectives:in Microeconomics, solving problems dueto market failures; in Macroeconomics,controlling the economy to ensure thegreatest prosperity for the people.”•In your experience, is this whatgovernments want?