The relationship between market failures and public finances

The relationship between market failure and public finance, that is, for the economic development of a country, the market and the best are indispensable.

The market is the "invisible hand" and the "visible hand", and the two of them complement each other in order to make the country's economy grow steadily. The most important basic function of finance is to ensure economic stability, and the market has a "market failure" phenomenon, which requires the state to intervene to make up for market failure, through the intervention of the "visible hand" and the market "invisible hand" cooperation, to achieve the optimal allocation of resources, to ensure the fair distribution of income, stable economic development.

The market is the "invisible hand" and the "visible hand", and the two of them complement each other in order to make the country's economy grow steadily. The most important basic function of finance is to ensure economic stability, and the market has a "market failure" phenomenon, which requires the state to intervene to make up for market failure, through the intervention of the "visible hand" and the market "invisible hand" to achieve the optimal allocation of resources, to ensure the fair distribution of income, stable economic development, that is, for a country's economic development, the market and **, both are indispensable.

Public finance refers to the distribution activities or economic behaviors that concentrate a part of social resources to provide public goods and services for the market and meet the public needs of society. It can be seen from this that the biggest characteristic of public finance is to make up for the defects of the market, so it is very necessary to let the "visible hand" of public finance regulate the market under the conditions of a market economy.

Market failure mainly refers to problems such as public goods and external effects, and when these problems occur, the market cannot adjust spontaneously.

At present, many scholars believe that market failure is to be solved through ** behavior, which should be said to be a better method now.

This very important issue of economics is mentioned in most textbooks, so you may wish to refer to it...

A friend on the 1st floor posted a bunch of posts, but I still don't know what he wants to say-

Because they are limited by factors such as non-exclusivity, non-competition, externalities, scale of production, and natural monopoly, public goods cannot be provided by the market.

The details are as follows:

2. Non-competitiveness: public goods are not competitive for consumption, and the increase in the number of consumers does not have an impact on production costs.

3. Externalities: The externalities of public goods are difficult to measure accurately, and the long-term benefits generated are also difficult to calculate.

4. The scale of production and the natural monopoly: only under the conditions of economies of scale, the average cost of public goods can be reduced to a certain extent, otherwise it will form waste; The economies of scale of public goods such as infrastructure determine their natural monopoly, which excludes effective competition.

The reason why the market cannot provide pure public goods is that public goods are not competitive, public goods are not exclusive, and consumers want free rides.

In fiscal science, free rides refer to the act of consuming or using public goods without bearing any costs, and people who have such behaviors or those who have the motivation to let others pay and enjoy the benefits of public goods themselves are called free riders. The phenomenon of free rides stems from the non-exclusive and non-competitive nature of the production and consumption of public goods. The act of free rides often leads to a shortage of public goods**.

Public goods are basically closely related to people's livelihood and are sensitive to **, because they often mainly cover low- and middle-income groups in society. As a result, public goods tend to deviate from those determined by market supply and demand. The market is mainly determined by supply and demand, and too high a high level deviates from the attributes of public goods and is likely to cause social instability, so it also determines that public goods cannot be effectively provided by the market.

Fiscal policy and financial support for public goods are necessary. This is also a common practice in countries around the world.

Fiscal Function: The resource allocation functionThe function assigned to the allocation of public financial resources by the revenue and expenditure policies adopted to provide public goods, correct externalities, and maintain the effectiveness of market competition. This function affects the distribution of social resources between regions and between the public and private sectors.

Allocation between consumption and investment.

Extended Material: Causes of Market Failure.

First, the microeconomy lacks efficiency.

The adjustment mechanism in the market economy cannot promote the efficiency of the microeconomy, which is manifested in the following ways: First, the market cannot meet the effective supply of public goods (lighthouse, public information, national defense, etc.). Public goods refer to the consumption of certain goods or services by one person without affecting the consumption or enjoyment of other people, which is characterized by non-competition and non-exclusivity, and the consumption of one good by one person does not prevent anyone else from enjoying the goods.

Since the beneficiary can get the item at no cost, it cannot reduce the use of the item by asking for a price, which is manifested in the fact that the item is always scarce.

2. Macroeconomic instability.

Under the effect of the economic cycle, the national economy is regulated only by the market, which is like "sailing alone". In the vast sea of market economy, there are unforeseen circumstances, and once faced with a stormy economic crisis, collapse, speculative bubble, and financial crisis, the blow to the national economy may be fatal. This instability is also sometimes manifested in recurring inflation and unemployment, or in imbalances in consumption and investment.

Third, there is a lack of fairness in social distribution commensurate with efficiency.

In the process of economic development, there are always two important issues related to the overall situation, namely, efficiency and fairness, namely, how to "make the cake bigger" and how to "divide the cake reasonably". Market failure and the failure of the market mechanism to fully play its role will not only cause the problem of low efficiency, but also may cause the problem of unfair distribution of state collisions. Observing the actual situation in China's economic field, on the one hand, there are relatively serious problems of laid-off unemployment, arrears of wages for workers and teachers, poverty among urban residents, and slow or even absolute decline in the growth of peasant incomes. On the other hand, there are rampant corruption, embezzlement of state property, huge illegal income, and imperfect tax system, resulting in the high-income class not paying taxes in time and in full.

The problem of unfair social distribution is becoming more and more prominent, and differences between urban and rural areas, regions, and industries are still widespread. It has been found that while the Engel coefficient of household consumption has been declining with rapid economic and national income growth in recent years, the Gini coefficient has climbed from 0 33 in 1980 to 0 45 in 2001 during the same period.

Answers]: a, b, c, d

This question examines market failures and public finances.

Option A is correct, only in the field of market failure, there is a must to dismantle the dust to be intervened by **.

Option b is correct, and it is the responsibility to correct the problem of externalities, including the adoption of non-market adjustment methods, including fiscal revenue and expenditure policies, so as to further define the scope of fiscal functions.

Option C is correct, individuals and economic organizations are powerless in the face of market failures.

Option D is correct, the existence of monopoly determines that the brother Hui ** should assume the responsibility of maintaining effective competition in the market, and bring the tasks related to this into the scope of financial functions.

The wrong option is not to travel with the competitiveness and exclusivity of economic entities in realizing their economic interests, which will make the market's self-force unable to always ensure the balance between supply and demand, so unemployment, inflation, and economic fluctuations and imbalances will periodically recur, which requires the use of financial means to intervene in the operation of the economy, so that it can develop healthily.

Public royal finance can only operate within the scope of market disruption ().

a.It is being dismantled cautiously.

b.Mistake. Correct Answer: a

Summary. Hello, I have seen your question and am sorting out the answer, please wait a while The relationship between the market economy and public finance.

Hello, I have seen your question and am sorting out the answer, please wait a while The relationship between the market economy and public finance.

1.Starting from the relationship between the market and the market, briefly describe the necessity of the existence of public finance under the conditions of market economy The market is an "invisible hand" and a "visible hand", and the two of them complement each other in order to make the country's economy grow steadily. The most important basic function of finance is to ensure economic stability, and there is a phenomenon of "market failure" in the market.

Answer]: A fiscal dust should play a role in the field of public goods and services that are needed by society due to market failure, which reflects the function of resource allocation of the financial department for clearing difficulties.