Question

Employers often select applicants based on whether they hold an academic degree. In most countries, universities need to be granted charters from the government to be able to award academic degrees to their students. In return, universities must abide by comprehensive and detailed government regulations upholding appropriate standards for teaching, examination and lecturers. Use the theories of market failure and government intervention to explain the reasons for government intervention into the market for higher education. Critically discuss potential problems with these interventions.

Answer 1

Education is considered as a public good, which is non excludability and non rival in nature. The government intervention in education can ensure equal availability for all. Most of the educational institutions are owned by non-profit institutions or government bodies. Government intervention justified in natural monopoly, neighbourhood effect and ambiguity from ambiguity. Natural monopoly focus on the market imperfections. The education principles are general education to citizens and focus in specialized education. Vocational and specialized education by the public authorities enhances the future development.
The government fund public education because there are several positive externalities for this. The government intervention can avoid the negative externalities in the economy. The higher education is highly regulated and rigid. The most important fundamental problems faced by education system are; over regulation of the education market, some misdirected funding from public, political economies etc. The economic efficiency achieved through the government intervention. Private enterprises focused only in profit. They make education as a business. Private education cannot afford by the poor families. There is incomplete information about the education system also makes the situation worse.