16 Government and Business
If it moves, tax it. If it still moves, regulate it. If it stops moving, subsidize it.
—Ronald Reagan
Learning Objectives
Explain why inefficiency in some markets provides a rationale for government intervention.
Show the effects of direct government intervention in imperfectly competitive markets.
Describe how antitrust laws and competition policies promote competition and reduce market failures.
Explain the market failure effects of externalities and government responses to them.
Show why open-access, club, and public goods cause market failures and how government responses help.
Discuss why granting intellectual property rights promotes innovation.
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