Government Intervention Shavone Lovell ECO/561 June 19, 2017 Dr. Mark Erenburg
Government Intervention • “Bailout” of Ford, General Motors, and Chrysler • 80.7 Billion investment from Treasury Department • Stock ownership to the US government in both GM and Chrysler • Ford did not need the funds due to previous made cuts but ask to be included to remain competitive with the subsidized companies
Government Intervention and Market failures Types of Market Failure • Demand side market failures • Supply side market failures • Consumer and producer surplus Types of government intervention • Direct Controls • Specific Taxes • Subsidies and government provision
Individuals/Groups Helped vs. Hurt by Intervention Helped • Auto industry workers and family • Executives of auto makers • Cities homes to the auto factories Hurt • Government taxes payers • Other government program recipients
Positive vs. Negative Externalities • Positive Externalities • Negative Externalities
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- Fall '09
- Market failure, Externality