Thursday, March 13, 2008
9. Governments can improve some market outcomes.
9. Governments can improve some market outcomes. There may be a role for government to intervene when the marketplace does not provide a socially desirable outcome. For example, many places in the United States are much less polluted today than they were in the 1960s. This is due in large part to pollution control laws that alter some market activities. The government also provides national defense, which would be difficult for the private marketplace to provide. People disagree about the extent to which government can or should correct market failures. This concept is important to remember in module 10 (Fiscal Policy).