2.4 government intervention in the market

Price ceiling

The mandated maximum amount a seller is allowed to charge for a product

Set bellow equilibrium

Price floor

The mandated minimum amount a seller is allowed to sell a product for

Set above equilibrium

Fiscal policy

Policies which effect government expenditure and government revenue

Balanced regional development

efforts to enhance wellbeing and living standards in all region types and improve their contribution to national performance

Regulation

The controlling of an activity by means of rules

Nationalisation

Taking an industry into public ownership

Privatisation

When the government sells a state owned business to the private sector

Subsidy

financial aid given by the government to individuals and firms in order to encourage a certain behaviour or to reduce the cost of production/increase efficiency

LATER

Legislation

Awarness

Taxation

Expenditure

Regulation

Economic aims of the government

Full employment

Manage debt

Care for the environment

Regional development

Control inflation

Ways the government can achive balanced regional development

tax insentives

Improve infastructure

Training facilities

Provide venture capital for start ups

Government intervention

when the state gets involved in markets and takes action to correct market failure and so improve economic efficiency

Why regulation is important

Protect public welfare

Ensure workplace saftey

Maintain profesion conduct (e.g. code of conduct for teachers)

Advantages of regulation

Improved health and saftey

Protect Consumers from exploitation

Protect the enviornment

Arguments for privatisation

Government revenue

Efficiency

Increased competition - new firms entering the industry

Arguments for nationalisation

Provision of Essential Services

Stability of jobs

Long term planing

Profits reinvested into communities

Advantages of intervention

Attracts FDI

Regulates monopolies and prevent them

Provide employment (e.g. public sector)

Provide essential services

Reasons for unbalanced regional development

Lack of employment opportunites

Low wages

Lack of services

Lack of 3rd level institutions

Benifits of balanced regional development

Creates employment

Reduces emigration

Less rural/urban devide

Disadvantages of intervention

Reduces enterpreneurship

Increases bureaucracy

Inefficient

Arguments against privatisation

Increased unemployment

Lack of social commitments

semi-state bodies may be loss making

Disadvantages of regulation

Impedes profitability

Net cost on society (adds to cost of doing business)

Arguments against Nationalisation

Inefficient

Opportunity cost

Discourage investing in the Irish economy