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  • Bachevinder Singh A/L Param Singh @ Bob

    November 8, 2021 at 7:40 pm

    Government can affect markets either through direct participation (as a market maker or as a buyer or supplier of goods and services), or through indirect participation in private markets (for example, through regulation, taxation, subsidy, or other influence).

    Government frequently has a choice. I could say they can change anything at any time. There are pros and cons associated with all types of Government intervention. Many, if not most, intervention can have unforeseen consequences. Failure to address indirect costs and possible spillovers can result in a less effective policy and impose unnecessary economic costs.

    Government intervention can also benefit regulated industry rather than the wider public, promote inefficiency because of restricted competition or underplay the role of consumers by concentrating purely on the supply-side of the market. In general, measures that directly limit competition in the market will not be the best instruments. Regulation of, for example, price, entry, and exit, or allowing anti-competitive mergers and agreements between firms, are generally rather blunt measures and can be less transparent than other measures such as setting product standards or introducing taxes or subsidies. While these may also have effects on competition, they can typically be designed in a more focused and transparent way.

    Just my 2 cents view 😊