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Nov 1, 2019 · Disadvantages of government intervention. Government failure. Government failure is a term to describe how government intervention can cause its own problems. For example, the government may take decisions for short-term political consideration which lead to an inefficient outcome.
Accountability serves not only to ensure control over representatives and rule-makers in general (democratic perspective) but also to prevent abuses of power (constitutional perspective) and enhance performance (learning perspective).
- Minimum Prices
- Diagram Minimum Price
- Maximum Price
- Buffer Stocks
- Nudges
- Subsidy
This involves the government setting a lower limit for prices, e.g. the price of potatoes could not fall below 13p. The minimum price could be set for a few reasons: 1. Increase farmers incomes 2. Increase wages 3. Make demerit goods more expensive. For example, a minimum price for alcoholhas been proposed.
A minimum price will lead to a surplus (Q3 – Q1). Therefore the government will need to buy the surplus and store it. Alternatively, it may impose quotas on farmers to decrease the quantity of the good put onto the market.
This involves putting a limit on any increase in price e.g. the price of housing rents cannot be higher than £300 per month. Maximum prices may be appropriate in markets where 1. Suppliers have monopoly power and are able to generate substantial economic rent by charging high prices 2. The good is socially important – e.g. good quality housing is i...
Agriculture suffers from various problems. These include: 1. Fluctuating Prices 2. Uncertainty leads to lack of income 3. Low-Income elasticity of demand 4. Positive Externalities of Farming Therefore the government may feel there is a case to intervene and stabilise prices. A buffer stock involve a combination of minimum and maximum prices. The id...
This is a different kind of government intervention. It is a government policy to influence demand indirectly. For example, putting cigarettes behind closed covers – makes it harder or less enticing for people to buy. The government may also place flashing speed limit signs to give a smiley face to drivers under the speed limit, but an unhappy face...
The government may subsidise goods with positive externalities (for example, public transport or education). In the above example, a subsidy shifts output to 120 (where SMB = SMC) so it is more socially efficient. Subsidies Problems of subsidies 1. Cost to government 2. Subsidies may encourage firms to be inefficient because they can rely on govern...
Oct 24, 2021 · The principal-agent problem can occur in government when officials have incentives to act in their own interests rather than as agents for the people, who are the principals.
Here are five of the most common conflicts of interest in government and how officials can avoid and prevent even the appearance of acting to benefit their personal and financial interests, at the cost of the public’s interest.
Jul 24, 2021 · This proliferation of “unprincipled principals” arguably enhances the relevance in contemporary governance of “principled bureaucratic agents” who are willing to engage in voice and guerrilla sabotage to preserve good government.
People also ask
How can principal-agent problems in government be reduced?
Do government agencies have discretionary practices?
What is government failure?
Do bureaucrats sabotage 'unprincipled policies'?
What do bureaucrats do if a policy is unprincipled?
What if the government identifies damaging goods?
We ask what evidence there is that practices have been developed to address discretion both in government agencies and in the arguably more challenging discretionary practices of transnational and private regulators, who are further removed from elected government.
