HND经济学导论OUTCOME3

Market Failure and Government Policy

SCN: 177099996

GTB4

Li Wenxuan

Tutor:Lou Qiuyin

November 6th, 2016

Content 1.0 introduction

2.0 Market Failure

2.1 Merit Goods

2.2 Public Goods

2.3 Imperfect Competition

2.4 Externalities

3.0 Welfare Policy

3.1 Some important welfare

3.1.1 child benefits

3.2 Case of welfare

3.3 Instrument

4.0 Conclusion

Reference

1.0 Introduction

Economy is human activity that consists in producing exchanging, distributing, and consuming goods and services, studied by economics and realized inside on.In this report, discussing the reasons for market failure and probe government roles in relation to each of the following and government policy.

2.0 Market Failure

The market is a set of buyers and sellers with the potential to trade with each other. But when the market cannot distribution goods and laborefficiency that is market failure.

2.1 Merit goods

Merit goods are products whose consumption or production creates social benefits that exceedthe privatebenefit. Justlike education,healthcare, public transport.Because many people cannot know anything the advantages, so the government should intervene people choice.Government can get to make a law. For Chinese, have ‘Nine-year compulsory education law’. That can help people choose merit goods and benefits of people.

2.2 Public Goods

Public goods are ready for societal members enjoy the items together, strict sense of the public goods with non-competitive and non-exclusive. It is a public thing just like the Park bench or civil defense siren. Someone used it that do not hinder others use it.The government should build this goods, because do not have someone could even want to buildbuild but the society need it. The government use tax to build and maintain it.

2.3 Imperfect Competition

Imperfect competition is monopolistic competition and oligopoly. It is meant by perfect competition cannot maintain. Because have some buyers or sellers could affect the market price. The market cannotchange the price. Because the imperfect competition will decrease the market efficiency. The government should change it to adjust a market to a new environment. For example make a law. Just likesAntitrust Law.

2.4 Externalities

The following sentences arefrom Wikipedia. In economics, an externality is the cost or benefit that affects a party who did not decide to incur that cost or benefit. Economists often urge all governments adopt policies that "internalize" an externality, so that costs and benefits will affect mainly parties who choose to incur them. Just like the pollution, government thinks who take this who should solve this. If there are

external benefits, such as in communal safety, less of the good may be produced than would be the case if the producer were to receive payment for the external benefits to others. Thus, unregulated markets in goods or services with significant externalities generate prices that do not take into account the full social cost or benefit of their transactions; such markets are therefore inefficient. So government should make some laws or rules to standard it.

3.0 Welfare

The UK as a long-term capitalist country. It is a long and perfect social welfare safeguard system. Society welfare including the benefits of family, child benefits, death and benefits etc.

3.1Some important welfare

3.1.1 Child Benefits

The child benefits in the UK, government ensures that every child can receive education and life even they do not have kinsfolks. From child to adult, government subsidies, aid, guarantee the smooth growth of children. The British government's children's welfare, both in terms of welfare, welfare content and service level, its integrity and comprehensiveness is exemplary. first of all, British children welfare legislation perfect, various kinds of laws and regulations, not only covers the grand, and established the principle of "children's welfare is the highest", for children's right to survival and development, such as participation rights protection are made a detailed regulations and emphasis. second, the completion of the "welfare state" for citizens "from cradle to grave tomb" comprehensive social security, the benefit of children mainly include: the national health insurance, children can enjoy besides dental surgery, visual acuity and glasses all free medical care. Family subsidy system, covering maternity benefits, birth allowance, children stick, Tianjin, children, child care allowance, single special allowance, etc.; Education funding, children receive primary and secondary school education for free, with free books, stationery, lunch at school; Social services, set up the children's home within the community, for too busy to take care of the child's family to provide help and received orphans and abandoned children, and is responsible for their life and education. Again, the whole society to found a multi-level, vertical and comprehensive child welfare system. This way is mainly under the government's macro management, association for the disabled, charitable organizations, social service machine structure, all kinds of schools and community organizations and groups, within their respective fields to carry out the child welfare services, formed a multi-level, three-dimensional type, a full range of child welfare services network. The British not only built up social relief, social insurance, social security, basic education, medical service content such as children's social welfare system, and children's rights in government policies, laws and institutions for medical treatment and teaching education practice of occupies more and more important position.

3.2 Case of welfare

In the UK, child benefit is operated by Her Majesty's Revenue and Customs (HMRC). As of April 2015,This is £20.70 per week for the first child (including the eldest of a multiple birth) and £13.70 per week for each additional child.

The system was also implemented in August 1946 as "family allowances" under the Family Allowances Act 1945, at a rate of 5s (= £0.25) per week per child in a family, except for the eldest. This was raised from September 1952, by the Family Allowances and National Insurance Act 1952, to 8s (= £0.40), and from October 1956, by the Family Allowances Act and National Insurance Act 1956, to 8s for the second child with 10s (= £0.50) for the third and subsequent children.

By 1955, some 5,000,000 allowances were being paid, to about 3,250,000 families.

It was revised in 1977, with the payments being termed "child benefit" and given for the eldest child as well as the younger ones; by 1979 it was worth £4 per child per week. In 1991, the system was further altered, with a higher payment now gave the first child than for their younger siblings. In October 2010, the Conservative-Liberal Democrat coalition government announced that Child Benefit would be cancelled from households containing a higher-rate taxpayer from January 2013.

After some controversy this was amended so that any householder with a least one person with prescribed income over £50,000 would lose Child Benefit by a taper which removed it altogether when the income reached £60,000. This came into force on 7 January 2013.

3.3 Instrument

In the UK, child benefit is administered by Her Majesty's Revenue and Customs (HMRC)

4.0Conclusion

Over the years, the welfare policy help stabilize the social order, ensure the people's living standards, the general improvement of social material and cultural level. Close the gap between the rich and the poor area, ease social contradictions in all walks of life. However,, at the same time, the years of high welfare, let government deficit

continue to increase, and weakening the enthusiasm of people to work, make social efficiency is low, and the resulting a series of struggle between the parties.

Reference

Externalities https:///wiki/ExternalityBuchanan, James; Wm. Craig Stubblebine (November 1962). "Externality". Economical. 29 (116): 371–384. doi:10.2307/2551386

Case of welfare，https:///wiki/Child_benefit，

Https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2015-16/tax-and-tax-credit-rates-and-thresholds-for-2015-16#child-benefit-and-gu ardians-allowance

Jump up ^ Whitaker's Almanack: For the year 1958, p. 1127. J. Whitaker & Sons, London, 1957

Jump up ^ "Spending Review, October 2010, United Kingdom HM Treasury, Oct 2010.

Jump up ^ "HMRC High Income Child Benefit charge

Redo:

3.1.1 Child Benefits

. No matter how much you earn or how much insurance you pay, you are eligible for Child Benefit as long as you have a duty to caring for the child. Benefits apply to children under 16 years of age and are eligible if children aged 16 to 18 are still enrolled in non-tertiary institutions.

How to Apply: Request by the hospital or the Social Security Office.

British university before the stage of education is free, university stage, 90% of college students are eligible for government subsidies. Therefore, for low-income families, from kindergarten to university education is a loose way.

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