Public Policy: Using Market-Based Approaches - Department for ...

SECTION 4
Introduction
This part of the report reviews the economic literature on market mechanisms,
and is organised as follows. We begin by describing the principal rationales for
government intervention in Section 5. We then outline the situations in which
government intervention can create its own problems (‘government failure’)
which may undermine, or at least reduce, the effectiveness of government
intervention in Section 6. In section 7 we describe the market mechanisms that
have been proposed as methods for reducing this government failure and issues
that need to be considered when implementing these mechanisms. Lastly, in
section 8 we present a framework for assessing the performance of these
mechanisms.
Additional information and evidence drawn from our review of the literature is
contained in Part V of the report.
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