Market Failure

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Market Failure
Government plays a vital role in creating the basic framework which fair and open for competitors in the market because competition plays a vital role in the economy. Competition is good but it also has to be fair. There are many benefits to competitions especially in the private sectors. However there are some markets that monopolise the economy which excruciating the price fixing and customer spending powers. Example; Gas and Electricity, Transport services and Oil and etc. Some of the competitions are good because it creates new rivalry, decrease in prices for similar products too…. And create alternatives. Government is responsible for establishing the rule for trading: for goods and services, trading in general. The reason for government rules and regulations are to protect consumers from scams, fraudsters etc. Therefore government sets out consumer rights in relation to the firms that they deal with and aims to ensure that the firms at fairly and honestly towards their consumers. Example countries like Pakistan and Africa etc are still facing economic crisis due to government corruption and not looking after the interest of the nation. Competition law prevents firms from making anti-competitive agreements, and ensures ‘dominant’ firms are not able to exploit their consumers. For example Milk price fixing by supermarkets with the distributers. This is a classic case whereby it is a necessity and essential item for our daily life and without the completion policy the firms may able to monopolise and corrupt the market and create market failure altogether. On the hand the government also allows certain freedom for competitiveness in the market as it bring various other beneficial factors to consumers : example mobile phone.: cheaper tariff ie; BT landline charges £0.30 per minute to call Singapore whereby using Lyca Mobile to call a land line and mobile phone is £0.01 per minute. Therefore this example helps consumers to get...
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