There is also concern that the government may incur a higher cost in paying for unemployment benefits which necessitates it regulations in mergers.
Provision of market activity
Other than the above two likely reasons for government involvement, the government may have non-economic reasons. Such activities include the national security which is a public good which is related to welfare. The government intervene in market activities so that they can provide welfare commodities and products that otherwise cannot be provided for under the market mechanism. The provision of public goods such as defense and security is only possible through government interventions. Government regulations and interventions ensure that society does not miss production of welfare commodities that the market cannot produce.
Cultural Identity Promotion
This includes aspects such as sustaining productive capacity, producing for the future and sustaining the population. This is mainly the case such as maintaining Oil reserves and grains for consumption. Where the market is left to manage and provide for the economy, there is bound to be deficiency where storage for future is needed. The government steps in to undertake this activity since it has no economic profit to undertake. The objective sought in this instance is to preserve the national culture and safe guard the interest of the community.
Correction of government activities
Where the regulatory body has undertaken an activity that has led to undesirable result far from optimal corrective measures are necessary. This argument may not be considered worthy especially by those who are against government involvement in market activities. With government intervention being subjected to reactions from other economic institutions, failure is inevitable....
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