Market Failure Government Interventions Do More Harm than Good

USING THREE EXAMPLES FROM ARGENTINA, EXAMINE THE STATEMENT THAT ‘GOVERNMENT INTERVENTIONS TO CORRECT MARKET FAILURE DO MORE HARM THAN GOOD
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SECTION A
Dollery and Wallis (2001, p. 62) define market failure as “the inability of a market or system of markets to provide goods and services either at all or in an economically optimal manner.” Government failure, on the other hand, occurs “when the government has created inefficiencies because it should not have intervened in the first place or when it could have solved a given problem or set of problems more efficiently, that is, by generating greater net benefits,” (Winston, 2006, p. 2). According to the two authors, the empirical theory of market failure aims to explain why markets that otherwise follow neoclassical economic assumptions produce inefficient outcomes. When a project fails, less welfare is generated than might have been generated with the available resources. Correcting the error becomes the collective responsibility. Government expenditure, taxation, and regulation are frequently used as justifications for market failure. The argument that free markets do not provide socially optimal results allows proponents of different government initiatives to argue that those policies are economically essential and helpful in policy areas ranging from education to sugar consumption. As a result, the public discourse over market failure and academic economics is vastly different in their understanding of markets. Free markets aren't always successful and efficient. In this case, what exactly happens? Solving this puzzle has necessitated an enormous amount of investigation. Various methods for the study of market failure have been created by social scientists, including historians, economists, political scientists, social theorists, public administration professionals, and anthropologists. Welfare economists have established the notion of market failure as one of the most effective methods of state analysis. According to the theory of market failure, the government should intervene in the economy when markets fail on the basis of economic rationality or equity (Careers360.Mobi, 2022). Most of the time, the authorities will intervene to remedy the problem and restore order to the market. Because of the conceptual agreement that Argentina is not just unstable and exploitative but also contributes to market failure, the government must intervene across several fronts to neutralize these disagreeable features. This paper uses Argentina's subsidy on domestic, regulation and tax policy to argue that government interventions to correct market failure do more harm than good. In section B the paper analyses market failure theory in terms of explaining market failure, government interventions and government failure and its causes. The paper aims to use examples from Argentina to argue on the statement in which the three selected government interventions caused a massive market failure.
SECTION B
Market failure theory
The modern version of this concept owes much to William Baumol's Welfare Economics and the Hypothesis of the State, Paul Samuelson's renowned publication on "T...