When the market fails there are calls for the government to step in and clean up

Question

When the market fails there are calls for the government to step in and clean up the mess. Here, we consider three market failures:

externalities,
public goods, and
informational problems.
Examine each market failure and the effect of each failure considering perfect competition as a benchmark.

There are alternative methods for dealing with market failures that include direct regulation, incentive programs such as tax incentive programs and market incentive programs, and voluntary reductions. At issue, is whether government can successfully address market failures.


Are there sources of market failure other than those listed in your readings?
Describe how government intervention to address a market failure might worsen the situation.
Provide an example of where government intervention does work and why that is so.

Explanation / Answer

answer externalities, public goods, and informational problems. the reasons which is given above besides it has some others effects. some people whose have enough money can dominate the market and purchase a have number of specific goods and store it for some time. due to which the market goes in recession and the demand of the supply increases.automatically the prices increases and that people then comes out again t the market and starting supply the stored products. for exampled sugar inflation or medicine inflation in the market.

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