Issues With Governement Intervention (4)

Question 1

Goals of gov intervention (4+)

Answer 1

Low prices for C
Reduce abnormal profits by reducing consumer surplus
Increase efficiency
Increase choice + quality

Question 2

Issues with gov intervention (4)

Answer 2

Lobbying
Asymmetric info
Regulatory capture
Voluntary codes of conduct

Question 3

What is lobbying

Answer 3

When firms will bribe and influence gov officials to make a decision which is in their best interest

Question 4

What is regulatory capture

Answer 4

Firms try and alter the decision of the regulatory body in their industry

Question 5

What is asymmetric info (2)

Answer 5

Regulating bodies lack information that firms have
Make decisions that benefit firms more than they should

Question 6

What voluntary codes of conduct

Answer 6

The codes are drawn up in ways that minimise a firms cost to comply with them as they have more information

Question 7

Lobbying example (2)

Answer 7

Bernie ecclestone = head of sports governing body donated £1m to Labour Party
Tony Blair made F1 exempt from tobacco advertising ban

Question 8

Regulatory capture example (2+)

Answer 8

Southern water dumped raw sewage into protected coastal areas
Environmental agency failed due to deliberate lack of control + investment

Question 9

Why does rev capture happen (3)

Answer 9

Bribes
Friends in industry
Become sympathetic

Question 10

Asymmetric info example (3++)

Answer 10

Rishi Sunak policy 2023 = stop asylum seekers crossing channel by boat entering uk
UN commissioner for refugees said the policy breached UN convention on refugees law
MPs had voted for a policy that broke the law + doesn’t help the asylum seekers = where will they go