Reasons behind Government Intervention in the Market Free Essay Example, 3250 words

This essay explores two reasons behind government intervention in the market: social efficiency and macroeconomic objectives. Social efficiency is achieved when the marginal cost of the production or the consumption is equal to marginal benefits to the society for production or consumption. It is very difficult to judge between fair and unfair distribution. The government also can intervene in the market to promote fairness such as promoting income distribution, basic standard of services to all citizens such as helping people with mental or physical disabilities. Another one can promote safety where a customer is not aware of the product. In the United States, a regulator call Consumer Product Safety Commission (CPSC) is there who has the authority to regulate the sale and manufacturing of thousands of consumer products. Also, the government promotes sick firms or the firms which are working for the sake of humankind like green energy, biofuel etc. Macroeconomic objectives are cont rolling inflation; counteract the effect of an economic cycle, control the countries balance of payment. Inflation can be controlled by changing the monitory policy. Economic cycle can be counteracting by keeping employment steady during a recession. We will write a custom essay sample on Reasons behind Government Intervention in the Market or any topic specifically for you Only $17.96 $11.86/page