Economics - Australia's Government and relation to the economy

Market Failure

Market ill luck refers to the shortcomings or inadequacies of the marketplace system of stinting arrangement in achieving allocative efficiency in all circumstances. Market failure can occur in a number of areas of economic activity much(prenominal) as the following:

- The market fails to go away public goods which may be socially valuable except beca single-valued function of a lack of incentive, the private sector fails to provide them in sufficient quantity and quality

- The market distributes income unequally. The distribution of market income is ground on the relative marginal productiveness of the factors of production, not consort to equity or fairness of the distribution among all sections of the population

- The market system may lead to the emergence of monopoly power in markets where effective competition between firms is weak or absent.

An pattern of Market failure includes the inadequate provision of some corporate goods and services, public goods and merit goods. Collective goods and services include those demanded by the community as a whole such as defence, education, health and social security. Public goods such as content defence and national parks are said to be non-excludable and non rival.



Merit goods are goods and services that the governing believes are salutary to society but they may not be produced in adequate quantities because the market is too small and there is minor or no incentive for private production such as opera, libraries and theatre.

Functions of the Australian Government

The broad economic functions of the Australian government are the reallocation of resources and the redistribution of income through taxation and government expending; the stabilisation of the economic activity through the use of fiscal and fiscal policies; the provision of goods and services through public traded enterprises; and the use of other economic policies such as competition and environmental...

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