Government Policies to Correct Market Failure
Students will evaluate the effectiveness and limitations of various government policies designed to correct market failures. Policies include taxation, subsidies, regulation, and tradable permits.
About This Topic
Students will evaluate the effectiveness and limitations of various government policies designed to correct market failures. Policies include taxation, subsidies, regulation, and tradable permits.
Key Questions
- How effective are Pigouvian taxes in internalising negative externalities?
- What are the limitations of using direct provision for public goods?
- How can governments mitigate the problem of asymmetric information?
Active Learning Ideas
See all activities→Activities & Teaching Strategies
See all activities
More in Market Failure and Government Intervention
Public Goods and Externalities
An investigation into market failure caused by public goods and externalities. Students will analyse how the free rider problem and divergence between private and social costs lead to allocative inefficiency.
8 methodologies
Imperfect Information and Merit/Demerit Goods
Students will explore how asymmetric information and imperfect information cause market failure. They will apply these concepts to the under-consumption of merit goods and over-consumption of demerit goods.
8 methodologies
Market Dominance and Income Inequality
This topic examines the inefficiencies arising from market dominance and the inequity of income distribution. Students will discuss factor immobility and its contribution to market failure.
8 methodologies