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Paper Topic:

Market Efficiency And Government Intervention

Market Efficiency and Government Intervention

Government intervention in market activities happens in response to certain circumstances . Government can intervene in market operation during cases of market failure , in limiting abuse of market power and to increase market efficiency . Government intervention usually includes policy changes and implementation of different market rules which may limit competition between markets and /or calibrate efficiency of the market to favor public interest ( Govermment Intervention

Accordingly , John Maynard Keynes supported the idea of government intervention to bring in market efficiency . Keynes believed that the market cannot

stand on its own , and is highly susceptible to instability due to deflation . Consequently , government intervention in the market activities can be of relevant help in stabilizing the economy . The government should actively participate in economic activities by controlling interest rates at a stable rate to make sure that economic prosperity will be achieved and the industry will be stabilized (Francis

Consequently , a stable economic condition with low inflation level can help in generating jobs for the public . Thus , government intervention in the market processes can be of great help in responding to the employment problems of the state . Stabilizing the wage rate for the workers through government intervention can lead to an increase in the employment rate

Thus , in contrast to the laissez faire economics , which proposed that the economy alone can regulate itself , Keynesian economics argue that government intervention is a necessary must in ensuring market efficiency . As market cannot operate on its own while provding benefits for the majority of the citizens , the government can and must intervene in implementing rules and policies that shall make the economy less vulnerable to deflation , hence , creating a more efficient market process that will stabilize the economy and benefit the majority of the people

Works Cited

Francis , Robert . John Maynard Keynes (n .d ) 19 February 2008 Government Intervention and Market Failure (n .d ) 19 February 2008 PAGE 2...

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