Summary

Market failure occurs when resources are not allocated efficiently

e.g. in monopolies or where externalities exist

Governments aim to reduce market failure with subsidies, taxation, regulation etc

Intervention may increase or create market failure

Competition policy aims to reduce unfair competition and monopoly power

Public ownership is the ownership of businesses by the government

Privatisation occurs when public firms are sold to private individuals

Regulation is rules and restrictions imposed by the government on the market , deregulation is the removing of those regulations

Equity is the idea of fairness

Poverty is a problem for UK governments and they try and alleviate it with a number of policies including benefits, taxation, credits and minimum wages

Cost benefit analysis aims to give values to social costs and benefits thereby resulting in more efficient allocation of resources