Y1 28 Government Failure Flashcards
(3 cards)
1
Q
What is Government Failure
A
Cost of intervention outweighs benefits of intervention
2
Q
Why does government failure occur?
A
Information failure: Normative externality valuing and policy level
Admin and enforcement: Regulation, subsidies, state provision, price controls, intervention buying
Regulatory capture: Regulators overlook societal interest for firm interest due to connections with firm
3
Q
Government failure unintended consequences
A
Black markets
Impact on poor: regressive tax increase
Impact on firms: Relocation,shut down, subsidy dependance
Employment: Firms release workers to keep profit high
