Government intervention
Definition. Government intervention refers to actions taken by the government to influence the allocation of resources in markets, usually in order to correct market failure or to promote equity. Common tools include taxes, subsidies, regulation, the provision of public and merit goods, and the direct setting of prices.
Intervention aims to move output closer to the socially optimal level, though it may itself create inefficiencies known as government failure if it is poorly designed or based on imperfect information.
This term belongs to Government Intervention in Markets in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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