Economic - Market Failure

Market failure

In economics, market failure is a situation in which the allocation of goods and services by a free market is not efficient. That is, there exists another conceivable outcome where a market participant may be made better-off without making someone else worse-off. There are some reasons for the government intervention in economic activity and these are also the explanations of market failure. The first one is to provide public goods. What is public good? For example, street lights and uncongested road are the public goods. There are two main characteristic of public goods, non-excludability and non-rivalry which leads them only could be provided by government rather than the private sector. The second one is to provide merit goods. The concept of a merit good introduced in economics is a commodity which is judged that an individual or society should have on the basis of some concept of need, rather than ability and willingness to pay. The provision of food stamps to support nutrition and the delivery of health services to improve quality of life are all the merit goods, and these services might not be provided by the private sector in sufficient quantities or of a sufficient quality, only the government could provides the merit goods. The third one is the existence of externalities. An externality is the cost or benefit that affects a party who did not choose to incur that cost or benefit. When the impact on the bystander is adverse, the externality is called a negative externality. And when the impact on the bystander is beneficial, the externality is called a positive externality. In order to deal with the negative externalities, Government uses many police to address these, for example, London takes the congestion charge to improve the car exhaust. And the last one is the existence of imperfect market. In short, the imperfect market is the market which has little or no competition. And there are many Restrict competitions, such as reductions in the level of products, Technology development, excessive prices, etc. So when one company has too much market power, the government may take the intervention to regulate the market by using the acts, such as Fair

Housing welfare system

What is welfare? Welfare is the provision of a minimal level of well-being and social support for all citizens, sometimes referred to as public aid. In most developed countries welfare is largely provided by the government, and to a lesser extent, charities, informal social groups, religious groups, and inter-governmental organizations. And in UK, the welfare was provided by the government, and the British system has been classified as a liberal welfare state system. In UK’s welfare system, it can be divided into seven kind—the policy for the pregnant women and children, for the disabled person, for the widows, etc. And in this article, it talks about the policy of housing benefit.