Report on Market Failure and Government Policy

Report on Market Failure and Government Policy

 Declaration of Authenticity

Declaration and Statement of Authorship

• I have not impersonated, or allowed myself to be impersonated by any person for the purposes of this assessment.
• This assessment is my original work and no part of it has been copied from any other source except where due acknowledgement is made.
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I agree and acknowledge that:

• I have read and understood the Declaration and Statement of Authorship above.
• If I do not agree to the Declaration and Statement of Authorship in this context, the assessment outcome may not be valid for assessment purposes and may not be included in my aggregate score for this unit.

Signature: ______________________________        Date: ____________________

Content

1.0 Instruction        4

2.0 Findings        4

2.1 Market failure        4

2.1.1 Merit goods        4

2.1.2 Public goods        5

2.1.3 Imperfect Competition        5

2.1.4 Externalities        6

3.0 Welfare policy        6

3.1 Child benefits        6

3.2 Instrument        7

3.3 Evaluation and case        8

4.0 Conclusion        9

Reference        10

Appendix        11

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1.0 Instruction        

The reporter is explaining the market failure, and in my explanation I have rightly mentioned the role in Government in the following areas: public goods, monopolies, external influences and asymmetric information. I will the explain the UK Government’s policy on welfare, identify and describe the tools the Government uses to implement its polices and make a reasonable assessment of its in the UK.

2.0 Findings

2.1 Market failure

Market failure means that the market cannot efficiently distribute goods and services. Market failure bring the best results. In particular, the economic theory of market failure tries to consider inefficient results in the market, otherwise it will conform to the market assumptions held by neoclassical economics. The theory of market failure is at the core of some economic analysis that supports government action in the market for goods and services, or the justification for direct government production. Many social welfare programs find theoretical rationality in the market failure or other violations of standard market assumptions.

2.1.1 Merit goods

Merit goods are those goods and services that the government feels that people will under-consume, and which ought to be subsidized or provided free at the point of use so that consumption does not depend primarily on the ability to pay for the good or service.

Merit goods and services create positive externalities when consumed and these 3rd party spill over benefits can have a significant effect on social welfare. Market failure occurs when merit goods and services are under-consumed under free market conditions.

Policy intervention can help either through offering financial incentives (e.g. consumer or producer subsidies) or through behavioral nudges and information campaigns designed to change our choices.

2.1.2 Public goods

An item whose consumption is not decided by the individual consumer but by the society as a whole, and which is financed by taxation. A public good (or service) may be consumed without reducing the amount available for others, and cannot be withheld from those who do not pay for it. Public goods (and services) include economic statistics and other information, law enforcement, national defense, parks, and other things for the use and benefit of all. No market exists for such goods, and they are provided to everyone by governments.

2.1.3 Imperfect Competition

Imperfect competition means at least one buyer or seller who is large enough to influence the market price. There is a certain degree of monopoly in the market, and individual economic people have a certain degree of influence on commodity market price. When there is monopoly, monopoly advantage of the market control to raise prices above the equilibrium price, which will lead to the corresponding loss of consumer surplus and producer surplus, the allocation of resources to reach the optimal state, leading to market failure. Moderate competition is beneficial to the development of the market, but once the competition develops into vicious competition or monopoly, it will reduce the economic efficiency and cause the waste of social resources and social welfare. In order to eliminate the influence of monopoly, the government can regulate the behavior of the economic subject through the laws and regulations of the Competition Law and anti-monopoly law.

2.1.4 Externalities

Because the effects of negative externalities are ignored, businesses do not pay for them. For example, the problem of pollution, companies do not take the initiative to regulate and control, this time need the government to levy tax and subsidies. Tax and subsidy policy is to impose negative external economic effects on the manufacturers to levy exactly equals marginal external cost of the tax, and give a positive external economic effect of the manufacturer equals marginal external benefits of a subsidy means, the purpose is to enable manufacturers to social and social costs of decision-making.

3.0 Welfare policy

Britain as a long-term capitalist country. It is a long-term and perfect social welfare security system. Social welfare includes benefits such as family, child welfare, death and welfare.

3.1 Child benefits

Children benefit in the UK, and the Government ensures that every child has access to education and life, even if they have no relatives. From the child to the adult, the government grants, rescues, guarantees the child to grow smoothly. The British government is exemplary in terms of welfare, welfare, service levels, integrity and comprehensiveness.

Emphasizing the leading role of the Government in child welfare protection, on the one hand is determined by the characteristics of children and their plight, the state of child welfare is not only the satisfaction of material and spiritual needs, but also reflects the level of civilization of a country's society, on the other hand, from the development of child welfare system, the role of the State is also indispensable.

First, the British child welfare legislation is perfect, various laws and regulations not only covered the grand, but also established the "highest child welfare" principle, for children's survival and development rights, participation rights protection, etc. made detailed provisions and focus.