Simon (2016) says market failure is a regulatory standard of justification for all actions of a particular government in neoclassical economics. Market failure comes in different economic forms, but majorly via micro and macroeconomic forms. Macro forms of market failure are direr than the latter. Government involvement to resolve market failure is always felt through their processes of mitigating microeconomic forms of failure. The government always comes up with policies like wage or tax policies to alleviate the effects of market failure.
The best way of tackling market failure is by reducing product demand through increasing its tax rate. By making sure that allocation of resources is evenly distributed, it reduces failure which has a great impact in mitigating market failure. The Proper information regarding how much tax can be inflicted on a particular commodity must, therefore, be in the custody of the government. There is also a possibility of rectifying under consumption of externalities by subsiding some goods like buses and trains. The government will therefore directly provide goods and services to the citizens. There will be even access to public services like education and healthcare apparently attached to positive externalities. Policies should be implemented that discourage provision of alternative public goods and services apart from those provided by the government. There would be trustworthiness and transparency with such provision of universal standards of services. The government also ensures buffer stocks by purchasing commodities by only purchasing goods from the market if a floor price is reached and selling the same kind of products if a ceiling price is available. In this manner, it ensures a fair price for consumers and a similar fair income for sellers is achieved.
There ought to rule that regard production, sales and even use of goods and services. The imposed rules should be backed up by fines and sentences of imprisonment as a way of tackling negative externalities. Environmental concerns are also likely to be addressed by the government to mitigate market failure. The government will agree on the amount of pollution to be emitted into the environment by carefully considering consequences relating to environmental degradation and market failure mitigation. It offers permits to firms with consent to corruption about profit making so as to reduce negative externalities. The government, therefore, uses mechanisms of the market making the policy easy to run. It is the obligation of the government to identify the individual responsible for paying external costs. Through such identification, it can reduce negative externalities. Ronald (2016), argues that there is no bone of contention and reason to give a damn whether responsibility is taken by the producer or the consumer since either of the two parties is a product of efficient outcome. This kind of intervention is required in theory and therefore very cheap to formulate.
The government is responsible for showing dignity to the citizens. They have a purpose of treating them fairly and equally and showing respect to their financial views. Dignity is all about the belief that everybody is equal and has a right to receive equal treatment from the government. Policies formulated by the government should encompass the recognition of dignity in relation the financial affairs. Those who are employed by the government in support and social care facilities are key targets in the provision of equal treatment to all citizens. The government has introduced equitable distribution of resources to the citizens to mitigate market failure. The core value of dignity is therefore used as a policy factor in the role of market failure mitigation.
Ireland. (2016). Retrieved on January 30, 2017, from https://brianmlucey.wordpress.com/2016/09/30/ireland-subsiding-housing-market-failure/.
Market Failure Compared to Government Failure. (2011). Retrieved on January 30, 2017, from http://www.becker-posner-blog.com/2011/09/market-failure-compared-to-government-failure-becker.html.
On Market Failure. (2016). Retrieved on January 30, 2017, from http://www.zerothposition.com/2016/10/19/on-market-failure/.
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