Government Interventions are Failing

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Introduction Around the world, governments, mostly intervenes in the market in order to accomplish their policy objectives. The government’s policy objectives or goals could be related to economics, ranging from stabilization of prices, export promoting, encourage equal distributions for income and commodity protection. The examples as per above proves that government intervention is not only limited to economic effects but also influences the society. There are two (2) types of usual regulated government interventions, which are automatic and discretionary. Automatic can be defined as intervention which is based on rules and regulations. On the other side, government interventions which are discretionary mostly targets stopping, suspension or limitation of a certain contract market. An early review of government market interventions shows that discretionary based interventions usually fails in accomplishing targeted policy objective compared to interventions based on rules as the latter proves to be more successful in a market economy. At the same time, discretionary interventions give results that are undesired and this could be quite damaging to the government. The harmfulness in this aspect can be defined as total impact on those involved in either marketing or producing commodities.

Government Intervention in the Markets Some of the reasons which cause government interventions are in order to overcome market failure, to accomplish an equal distribution
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