Question

In: Economics

The public sector is about providing services equitably in line with governance principles, which should address...

The public sector is about providing services equitably in line with governance principles, which should address the demand of the public. In so doing, all government operations should be based on the public interest and public trust. In line with this, antitrust laws may be promulgated to control the market. Nonetheless, such a market control mechanism may not be sustainable, because the effect is artificially regulating the competition to follow some kind of standardized pace. On the other hand, the private sector is free market oriented. When it comes to control, the most effective method may be the organic market control, which involves the use of economic forces. These forces are pricing mechanisms based on demand and supply. A price can be negotiated for its exchange. It is because price can be an indicator of the value of a particular product or service. This lends itself to price competition that would have direct bearing on controlling productivity in relation to demand and supply. Let me push the envelope a title bit further. The ultimate controller or pacemaker of market intensity can be just customers’ demands and preferences. What do you think?

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Expert Solution

When the question of serving the public arises, there are basically some issues regarding the distribution of resources. The first major issue is related with the inequality in the economy. We know that government has one of the aims to alleviate poverty and reduce income inequality.

Now if price mechanism is given the control of the market, there is no reduction in poverty or income inequality because market mechanism ensures that those who demand are also able to pay. Most of the commodities that are produced in the economy are consumed by the entire public and not just those who are willing to pay for it perhaps because of the presence of government and it's programs.

If the control is left with the market, then those with the ability to pay will be able to gather all the resources and people with little or no income will get nothing. Public is not only these consumers with wealth but also includes those who are poor and have less resources and ability to pay. Price ceiling and mechanisms related to it are therefore aimed at providing at least some amount of good to all the consumers in the market rather than allocating the resources in fewer hands. Therefore market mechanism should not be the controller of the resources because it will not be fair and equitable although it will be efficient.


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