Question

Compare the advantages/disadvantages of direct and indirect government interventions

Answer 1

There are many benefits of government intervention to those who can not afford, such as even income distribution, no social injustice, secured public goods and services, property rights and welfare opportunities. While, according to some economists, government intervention can lead to few disadvantages, too. Unnecessary goods can be produced, since the government may not be well aware of their people's needs and wants. There may be social gaps between the rich and the poor due to uneven distribution of income

Usually new laws, regulations or standards Increase the production costs of a firm causing higher prices or lower profit margins Impose costs of monitoring and enforcement–which have an opportunity cost Restrict choice of consumers and producers.The emergence of illegal black markets may reduce regulatory efficiency

Illegal black markets may emerge decreasing regulatory effectiveness[ Economic agents may bypass regulations unless other nations regulate to the same standard as well. Eg companies can shift production to a less stringent country.
• Regulators must decide the extent of the regulation, e.g. how much pollution is acceptable· Requires intentional coordination to prevent companies from moving overseas in order to avoid compliance, which means that the same level of regulation is required in all / most countries