Unit 2.8 · Market Failure: Externalities and Common Pool Resources
Evaluation of Government Policies
AO3
Syllabus Requirement
Strengths and limitations of various interventions: measurement difficulties, stakeholder impacts, degree of effectiveness.
Assessment Objectives
AO3Synthesis and Evaluation
Summary
Government policies aim to address market failures caused by externalities and the overuse of common pool resources. These policies seek to align production and consumption with the socially optimal level, where the marginal social benefit equals the marginal social cost. Understanding the effectiveness and efficiency of these interventions is essential for evaluating their impact on the economy.