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+--- Thread: what good do imposing taxes and providing subsidies do when there is market failure? (/thread-6922.html)
what good do imposing taxes and providing subsidies do when there is market failure? - αd ισι♪ - 10-12-2012 08:26 AM
I do not fully understand the concept of market failure.
Is it when societal views on an economic use of resources contrast to the the free market's views on an economic use of resources?
What help does govt intervention do in this case?
Also, is a market successful when Social Costs = Social Benefits?
- agreeablefriction729 - 10-12-2012 08:34 AM
By asking the question:
what good do imposing taxes and providing subsidies do when there is market failure?
I believe you understand the market far better than you realize.
If a business is unsuccessful it will lose money, If it is unsuccessful enough it will go bankrupt. If it goes belly-up the market has done its job, it has weeded out the weak or undesirable. If the product or service is in demand a new company or new financing will establish a new supply of the goods or service.
You have broken the code though. The less government messes with the free market the better that market can respond to legitimate demands. When people who really don't understand the market their dabbling will inevitably cause unintended consequence. Just watch and you will see all manner of this as more and more business are essentially Nationalized.
I sadly have to say; I believe the US economy, as once knew it, is a thing of the past... Socialists are cheering, producers are distraught.