Unit 2.4: Market Failure and the Role of GovernmentThis is a featured page

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Chapter 28 - Government and Market Failure: In this chapter you will learn:
  • How public goods are distinguished from private goods.
  • The method for determining the optimal quantity of a public good.
  • The basics of cost-benefit analysis.
  • About externalities (spillover costs and benefits) and the methods to remedy them.
  • How information failures can justify government interventions in some markets.

Chapter 29 - The Economics of Taxation: In this chapter you will learn:
  • The different tax philosophies and ways to distribute a nation's tax burden.
  • The principles relating to tax shifting, tax incidence, and efficiency losses from taxes.

Econ in the News - Unit 2.4 "Market Failure"

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sam3462@hotmail.com RE: Role of government 0 Jun 7 2011, 6:38 PM EDT by sam3462@hotmail.com
Thread started: Jun 7 2011, 6:38 PM EDT  Watch
I do agree that with the role of government, there will be some inefficiency in the economy.however in my opinion, the greatest problem existing now is the abusive of monopoly power. Externalities may be able to be solved by individuals alone. But there must be someone to keep those monopolies in control.

I think there must be at least a degree of government intervention in the market to protect the society's welfare.
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welkerjason Role of government (page: 1 2 3 4) 60 Dec 15 2008, 10:37 AM EST by mkaga
Thread started: Jan 13 2008, 12:55 AM EST  Watch
My question for you guys is this: Just how much of a role should the government play in a modern market economy? Many politicians and economists argue that the government should play a smaller and smaller role as our market economy becomes more developed. Eventually, all goods and services can and should ultimately be provided by the free market. Education, health care, transportation, even parks and open spaces... if individuals get utility from consuming these things, they should have to pay for them in the market.

And when it comes to correcting negative externalities, let the market take care of that too. If someone is being harmed by a spillover from someone elses economic transaction, they should be able to settle on their own, the government should play no role in solving conflicts of interest in a free market.

So, what do you think? Should the future be a place of more or less government in the economic lives of the people in free countries? Discuss.
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