Economics 1021A/B Study Guide - Quiz Guide: Government Failure, Social Contract, Regulatory Capture

• School: Western University
• Department: Economics
• Course: Economics 1021A/B
• Professor: bruce hammond

Document Summary

Leviathan or philosopher king: the role of the state chang. If you can free ride on other people to pay for a public good, you don"t have the incentive to voluntarily pay for it. But if everyone thinks the same way, no one will pay for it, which means that the good is not going to be provided at all. Even in this case, however, the road capacity will be determined by the company"s needs, rather than by those of the society, and thus sub- optimal from the social point of view. This can depend on one"s theory of how markets work: a market dominated by a monopoly would be seen as successful by the. Government failure: market failure a need for government intervention (free-market economists like. Reasons they cite for this is: some governments may not want to implement policy even if they can, this can occur in some cases of dictatorship (mobuto sese seko,