1、Market Failure and Government PolicySCN: 177099996GTB4Li WenxuanTutor: Lou QiuyinNovember 6th, 2016Content1.0 introduction2.0 Market Failure2.1 Merit Goods2.2 Public Goods2.3 Imperfect Competition2.4 Externalities3.0 Welfare Policy3.1 Some important welfare 3.1.1 child benefits3.2 Case of welfare3.3

2、 Instrument4.0 ConclusionReference1.0 IntroductionEconomy is human activity that consists in producing exchanging, distributing, and consuming goods and services, studied by economics and realized inside on. In this report, discussing the reasons for market failure and probe government roles in rela

3、tion to each of the following and government policy. 2.0 Market Failure The market is a set of buyers and sellers with the potential to trade with each other. But when the market cannot distribution goods and labor efficiency that is market failure.2.1 Merit goods Merit goods are products whose cons

4、umption or production creates social benefits that exceed the private benefit. Just like education, healthcare, public transport. Because many people cannot know anything the advantages, so the government should intervene people choice. Government can get to make a law. For Chinese, have Nine-year c

5、ompulsory education law. That can help people choose merit goods and benefits of people.2.2 Public Goods Public goods are ready for societal members enjoy the items together, strict sense of the public goods with non-competitive and non-exclusive. It is a public thing just like the Park bench or civ

6、il defense siren. Someone used it that do not hinder others use it. The government should build this goods, because do not have someone could even want to build build but the society need it. The government use tax to build and maintain it.2.3 Imperfect Competition Imperfect competition is monopolis

7、tic competition and oligopoly. It is meant by perfect competition cannot maintain. Because have some buyers or sellers could affect the market price. The market cannot change the price. Because the imperfect competition will decrease the market efficiency. The government should change it to adjust a

8、 market to a new environment. For example make a law. Just likes Antitrust Law.2.4 Externalities The following sentences are from Wikipedia. In economics, an externality is the cost or benefit that affects a party who did not decide to incur that cost or benefit. Economists often urge all government

9、s adopt policies that "internalize" an externality, so that costs and benefits will affect mainly parties who choose to incur them. Just like the pollution, government thinks who take this who should solve this. If there are external benefits, such as in communal safety, less of the good m

10、ay be produced than would be the case if the producer were to receive payment for the external benefits to others. Thus, unregulated markets in goods or services with significant externalities generate prices that do not take into account the full social cost or benefit of their transactions; such m

11、arkets are therefore inefficient. So government should make some laws or rules to standard it.3.0 Welfare The UK as a long-term capitalist country. It is a long and perfect social welfare safeguard system. Society welfare including the benefits of family, child benefits, death and benefits etc. 3.1

12、Some important welfare3.1.1 Child BenefitsThe child benefits in the UK, government ensures that every child can receive education and life even they do not have kinsfolks. From child to adult, government subsidies, aid, guarantee the smooth growth of children. The British government's children&#

13、39;s welfare, both in terms of welfare, welfare content and service level, its integrity and comprehensiveness is exemplary. first of all, British children welfare legislation perfect, various kinds of laws and regulations, not only covers the grand, and established the principle of "children&#

14、39;s welfare is the highest", for children's right to survival and development, such as participation rights protection are made a detailed regulations and emphasis. second, the completion of the "welfare state" for citizens "from cradle to grave tomb" comprehensive soci

15、al security, the benefit of children mainly include: the national health insurance, children can enjoy besides dental surgery, visual acuity and glasses all free medical care. Family subsidy system, covering maternity benefits, birth allowance, children stick, Tianjin, children, child care allowance

16、, single special allowance, etc.; Education funding, children receive primary and secondary school education for free, with free books, stationery, lunch at school; Social services, set up the children's home within the community, for too busy to take care of the child's family to provide he

17、lp and received orphans and abandoned children, and is responsible for their life and education. Again, the whole society to found a multi-level, vertical and comprehensive child welfare system. This way is mainly under the government's macro management, association for the disabled, charitable

18、organizations, social service machine structure, all kinds of schools and community organizations and groups, within their respective fields to carry out the child welfare services, formed a multi-level, three-dimensional type, a full range of child welfare services network. The British not only bui

19、lt up social relief, social insurance, social security, basic education, medical service content such as children's social welfare system, and children's rights in government policies, laws and institutions for medical treatment and teaching education practice of occupies more and more impor

20、tant position.3.2 Case of welfareIn the UK, child benefit is operated by Her Majesty's Revenue and Customs (HMRC). As of April 2015, This is £20.70 per week for the first child (including the eldest of a multiple birth) and £13.70 per week for each additional child.The system was also

21、implemented in August 1946 as "family allowances" under the Family Allowances Act 1945, at a rate of 5s (= £0.25) per week per child in a family, except for the eldest. This was raised from September 1952, by the Family Allowances and National Insurance Act 1952, to 8s (= £0.40),

22、 and from October 1956, by the Family Allowances Act and National Insurance Act 1956, to 8s for the second child with 10s (= £0.50) for the third and subsequent children.By 1955, some 5,000,000 allowances were being paid, to about 3,250,000 families.It was revised in 1977, with the payments bei

23、ng termed "child benefit" and given for the eldest child as well as the younger ones; by 1979 it was worth £4 per child per week. In 1991, the system was further altered, with a higher payment now gave the first child than for their younger siblings. In October 2010, the Conservative-

24、Liberal Democrat coalition government announced that Child Benefit would be cancelled from households containing a higher-rate taxpayer from January 2013.After some controversy this was amended so that any householder with a least one person with prescribed income over £50,000 would lose Child

25、Benefit by a taper which removed it altogether when the income reached £60,000. This came into force on 7 January 2013.3.3 InstrumentIn the UK, child benefit is administered by Her Majesty's Revenue and Customs (HMRC)4.0 Conclusion Over the years, the welfare policy help stabilize the socia

26、l order, ensure the people's living standards, the general improvement of social material and cultural level. Close the gap between the rich and the poor area, ease social contradictions in all walks of life. However, at the same time, the years of high welfare, let government deficit continue t

27、o increase, and weakening the enthusiasm of people to work, make social efficiency is low, and the resulting a series of struggle between the parties.ReferenceExternalities /wiki/Externality Buchanan, James; Wm. Craig Stubblebine (November 1962). "Externality". Economical. 29 (116): 371384. doi:10.2307/2551386Case of welfare，/wiki/Child_benefit，Https:/.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2015-16/tax-and-tax-