Question

1) Some local governments are imposing sanctions in companies like Uber and Lift making their business harder. Is this a form of government intervention in the economy? Explain

Answer 1

Exactly this cannot be called as Government inervention. Though it is correct that local governments have an impact on the central government and through this in the economy but solely this will help is not correct. Local government works with the core people and actual situation where all the things happen so they are influenced by many people, area, influential people, political power, authoritative people, rich people etc. And these things affect any decisions made by the local government.

If the local government are imposing sanctions in the Companies like Uber and Lift then certainly there can be any reasons for the same and the reasons can be in favour of the economy or some personal interests. Mainly what happens is that whenever companies from outside come into market and try to establish their business the local businessmen and companies are affected as their profits go down and their customers are reduced. This makes them too competitive and at some point of time it reaches to a point where they influence the local government through their power and authority and hold in the market and compel them to put rules or sanctions on these companies expecting that this will inturn help their business.

In this process they make the business of these new companies very difficult and they are in a very hard situation. Prima facie it looks that it is a form of government intervention in the economy but largely it is not as it will be influenced by the local businessmen in the market.