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Government Regulation and Market Failure


Explain how government regulation may reduce market failure.


Public Finance and Government Intervention

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I. 🍃Introduction
- Definition of regulation
- Importance of regulation in society

II. Regulation of firms
- Banning of production of products with external costs
- Example of water pollution
- Fines for firms that create external costs
- Example of air pollution

III. Regulation of consumers
- Banning of consumption of products with external costs
- High private costs that people are unaware of
- Example of cigarettes

IV. Compulsory consumption
- Products with external benefits
- High private benefits that people are unaware of
- Example of primary school education

V. 👉Conclusion
- Importance of regulation in promoting social welfare
- Need for effective implementation of regulations.

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