Government intervention techniques
Ad Valorem/Specific Taxation
Subsidies
Max/Min price
Trade pollution permits
State provision of public goods
Provision of information
Regulation
Government failure
A misallocation of resources arising from government intervention to correct a market failure
What is a minimum price
The lowest possible price it is allowed to sell a good for
What is a maximum price
A cap on price that means it cannot rise higher
minimum prices lead to
high prices leading to less consumer demand
maximum price leads to
reduced incentive to produce
information gaps
Government decisions based on limited data, leading to wrong cost
administration costs
The costs which arise in the monitoring and enforcing of government measures to correct market failure.