Government Intervention

Introduction:

Without Government intervention businesses may neglect the needs of certain stakeholders. e.g. 

• Damage Environment

• Exploit consumers by charging high prices

• Exploit workers by paying low wages

Therefore Government intervention may be required. As always in economics there are advantages and disadvantages to intervention. If there is too much intervention job creation and investment may fall and MNCs make look elsewhere to locate. Too little intervention and some stakeholders may suffer.

Student Activity: Please complete the following worksheet:

Government Policy worksheet

Government Policies to increase competition 

• Encourage the growth of small firms

• Lower Barriers to entry

• Introduce  legislation to reduce anti-competitive behaviour.

Limit Monopoly power

• Preventing mergers/acquisitions that create a monopoly

Protect Consumer interests

• One example of this is an attempt by the UK Government to improve banking services to consumers. Read this article