2- This intervention takes four forms:
1- Why market system need government?
- Although the market system generally works well, but it isn't perfect. The capitalism system succeeded but it creates some problems for some groups or individuals. The solution requires government intervention.
2- This intervention takes four forms:
1- Enforcing rules & regulations.
2- Providing public goods& transfer payments.
3- Fostering competition.
4- Contributing to economic stability.
1- Enforcing rules & regulations.
- The government creates a lot of rules which limit what businesses & consumers can & cannot.
- For businesses the government affects business activities, from applying for permits & licensing to start a business, the design of packaging & advertising. The burden of regulation falls particularly hard on small companies, which often lack the legal & administrative recourses to keep up with new rules.
- For consumers, consumers cannot buy some medications without a doctor's prescription; you cannot buy some alcoholic beverages without a certificate providing that you are old enough. Some goods such as "endangered animal species" and services such as "contract murder" aren't legally available at all.
- Companies & individuals are also required to share their profits with the government. This money used by the government to support services such as education, roods …. Etc...
- The gov may decide to remove existing regulations through the process of deregulation. For example: before the U.S gov broke up AT&T in 1984, no one was allowed to compete with AT&T for long distance phone services.
- At the same time AT&T are not allowed to sell computers & other products except for telephones. Deregulation changed all that. Long distance phone service is now one of the most highly competitive industries in the country, and AT&T is a leading supplier of computers & other high-technology products.
2- Providing public goods& transfer payments.
- Gov provides police & fire protection, build roads, and other goods & services called public goods "goods & services that can be supplied more efficiently by government than by individuals or businesses.
- Gov may make payments to individuals that aren't made in return for goods & services.
To be continued
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