Introduction these goods. If any of mentioned

 IntroductionThis report has been produced to explain and understand termMarket Failure. Explanation contains appropriate reference to the role ofgovernment in relation to the Public Goods, Merit Goods, Externalities, andImperfect Competition. The other section of the report is based on researchabout UK Government policy and its clarification. Identification of theinstruments the government use to achieve their policy. Justification andevaluation of the performance of the above policy in relation to its use inwithin the UK.Market Failure In economics, Market Failure is a situation where theallocation of goods and services is not efficient. Market failure occurs whenthe price mechanism fails to account for all the costs and benefits necessaryto provide and consume a good.

The market will fail by not supplying thesocially optimal amount of the good. The reason for Market Failure include lackof public goods, positive and negative externalities, environmental concerns,and underproduction of merit goods.Public GoodsPublic Goods in economy are goods or services which can beconsumed by residents and among others like defence, public fireworks,lighthouses, clean air. Government provides us these goods. If any of mentionedexamples would be private, owners would not have any profits of it. Merit GoodsMerit Goods are all goods and services which we cannot livewithout. The basic goods which Government feels people will under consume.

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These goods and services are funding by government which provide people aproper standard of living. The main examples of merit goods and services areeducation and medical care. In situation if all these services and goods wouldbe left to the market for many people with low income it could be notachievable, the prices could be too high for them. People may be left withoutany medial hospitalisation, or schools. Externalities Externalities are consequences of activities born dueproduction and consumption by society and environment, where is no appropriatecompensation paid. The common example of externalities is pollution, which isthe biggest problem these days.

Health and clean-up costs from pollution impactall of society, not just individuals within the manufacturing industries. Thegovernment try to stop these activities, by introducing regulations andpenalties for manufacture environment. Industries must be controlled, this willdecrease diseases and help to keep our environmental cleaner. ImperfectCompetition Imperfect competition is a market structure showingcompetition between businesses. This is situation where there are many sellers onthe market with different goods and prices. If seller is selling some unusualgood or services, then he might increase the prices and earn profits.

The highprofit is attractive for other sellers, where nowadays businesses want to keepprices on track with others. This situation can cause prices are too high forconsumers which cannot afford these goods due to low income.Policy2010 to 2015government policy: environmental qualityThe policy has been introduced due to air pollution, noisefrom neighbours or traffic. Issue of policy cover litter, graffiti,fly-posting, abandoned vehicles, and dog fouling. The mess and litter aroundthe streets has big impact of people quality life and build antisocialbehaviour among the people. Roads traffic and noise annual cost in England hasbeen estimated for £7 billion to £10 billion. This situation giving us clearevidence for relation between roads traffic and various type of illness whichincreased in the last few years, because pollution affect our lives. It isproven that air pollution is not good for our health, and damage ourbiodiversity system.

Moreover, in England it has been estimated to reduce thelife of expectancy of everyone by 6months due to poor air quality worth £16billion per year. Nowadays chemicals are everywhere, our homes, food, orclothes. That’s why it must be regulated. Instrument 1Due to a hugeamount of pollution local government and international government are workingwith on to improve air quality by controlling emissions of harmful pollutantand concentrations of harmful pollutants in the environment. National AirQuality strategy has been introduced in 2007. The main purpose of This AirQuality Strategy is improving air quality and reduce air pollutant emission inthe UK from today into the long term, what will bring people benefits ofhealth, better quality life, and protect the environment.Instrument 2’A Green Future’Government introduced 25 Year Environmental Plan. The aim of this plan is toimprove the environment within generation and leave it better then we found it.

This environment plan sets out our goals for improving the environment and makeit better in the next 25 years. This program includes detail strategy how thegovernment will be corporate with the societies and businesses to achieve this.Justification and evaluationThe aim of introduced policy is to improve better qualitylife and live longer in healthy environment. The policy helped to corporatepeople and market within environment in more effective way. The government isworking on several fronts to make sure that air quality is getting better forexample daily forecast of air pollution is published to give health advice topeople with illness like asthma, see Appendix 1. UK government decided that it isa crime to drop anywhere in land any litter or make a mess.

Therefore, it hasbeen decided to put the law in place to help local authorities prevent thatfrom happening, fixed penalty notices are also introduced, Appendix 2.  In general, the environmental quality policyeducate citizen how to make our earth better and live longer within healthyenvironment. There is clear evidence that since 1970 to 2015 emission of airhas been decreased, see the table below in Appendix 3.


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