Section 1 2
1.1 Market Failure 2
1.2 Public goods 2
1.2.1 Relation between Market failure and Public goods 2
1.3 Merit goods 2
1.3.1 Relation between Merit goods and Market Failure 2
1.4 Externalities 2
1.5 Imperfect competition 3
Section 2 4
2.1 UK government policy on the environment 4
2.2 About the policy 5
2.2.1 Water quality 5
2.3 Instruments the government use to achieve their policy 5
2.4 A justified evaluation of the performance of the policy in relation to its use within the UK 6
1.1 Market Failure
Market Failure is an economic situation where free market fails to allocate resources efficiently. It is the ...view middle of the document...
However, a lot of people in society will not consume merit goods because the private sector charges too high a price that they are willing to pay. The government will usually intervene and provide merit goods free of charge, or subsidised, so that everyone can consume them.
1.3.1 Relation between Merit goods and Market Failure
For an example, education is a merit good. When people are educated, they bring benefits to society in terms of lower crime, higher productivity in the economy. In this cases, there is a few market but it costs a lot. So, this is also served by government.
An externality is an effect of a purchase or use decision by someone set of parties on others who did not have choices and whose interests were not taken into account. There are two types of externalities, positive and negative externalities. Positive externalities are the external benefits. For an example of positive externality, building the dam has the positive externality. Because of building the dam, there will be water where the water is scarce. The negative externalities are called the external cost such as car drivers, who may fail to take into account the traffic congestion, while they create for others. The third parties organization, community and individual are indirectly suffering because as a result of the actions of consumer and procedure are attempting to pursue their own interest. In this case, the government may intervene with taxes through the use of company or individual, and returning it supports those who are suffering this cause.
1.5 Imperfect competition
Competition is the process which is having the equal in demand and supply. Imperfect competition is the process which is not having the equal in demand and supply. In market, a few or company get high profit or advantage. This kind of market is called monopoly market (Example: Sky Film Monopoly criticized and UK Cement Monopoly under Scrutiny). When the demand exceeds the supply, the price will high and the profits are increased. To be fair the price in the market, the government has to tax these monopoly markets.
2.1 UK government policy on the environment
One of the good choice is the UK government policy in the environment because the environment from the UK is very eco-friendly. In Myanmar, there is a lot of rubbish on the street and water is not clean enough. So, instead of Myanmar environment be UK environment. Moreover, there are some issue about greenhouse such as global warming, a company fined for illegally dumping waste, a drought or flood blamed on pollution, a health scare about car exhausts and smog in tropical countries.
There are 15 policies in the UK government on the environment. They are;
1. Marine Fisheries
2. Waste and recycling
3. Flooding and coastal change
4. Forests and woodland
5. Marine environment
6. Radioactive and nuclear substances and waste
7. Sustainable development
8. Business and the...