Government Intervention in Markets

AS Economics

Aims and Objectives

Aim: Understand methods of government intervention Objectives: Define government intervention Explain the reasons for government intervention Analyse methods of government intervention Evaluate methods of government intervention

Starter
Define market failure. How might the following things cause market failure?: Externalities Public Goods Merit and Demerit Goods Monopoly Immobility of Labour

Government Intervention
A failure of the free market to allocate resources efficiently is normally good reason for government intervention in that market.

The intervention is designed to correct market failure and achieve an improvement in economic and social welfare.

Government Intervention
The main reasons for intervention are: To correct market failure To achieve a more equitable distribution of income and wealth To improve performance of UK economy

Government Intervention
The main reasons for intervention are: To correct market failure To achieve a more equitable distribution of income and wealth To improve performance of UK economy

Government Intervention Methods

1. 2. 3. 4. Government legislation and regulation Direct provision of goods and services Financial intervention Intervention to Close Information Gaps

Government Intervention Methods

Collective Memory Game Discussion of Methods