Government may not have an incentive to correct a market failure because:
A) government doesn't have the information it needs to correct the market failure.
B) government reflects politics, which reflects political pressure to benefit special interest groups.
C) policy makers fear that intervention will lead to a Pareto optimal outcome.
D) the benefit of correcting the market failure might exceed the cost of correcting the market failure.

Question

Quizplus · Accepted Answer

Governments may be influenced by political pressures and special interest groups, which can lead to decisions that do not necessarily aim to correct market failures.

Government May Not Have an Incentive to Correct a Market