Title: Government failure - Wikipedia
Headings: Government failure
Government failure
Contents
History
Causes of government failure
Imperfect information
Human factor
Influence of interest or pressure groups
Political self-interest
Policy myopia
Government intervention and evasion
Costs of administration and enforcement
Regulatory Capture
Examples
Economic crowding out
Regulatory
Distortion of markets
Administration costs
Unintended consequences
EU Fisheries Policy
Overcoming government failure
See also
Notes
References

Content: Alexander Hamilton of the World Bank Institute argued in 2013 that rent extraction positively correlates with government size even in stable democracies with high income, robust rule of law mechanisms, transparency, and media freedom. Many Austrian economists, such as Murray Rothbard, argue that regulation is the source of market failure in the form of monopoly, adding that the term " natural monopoly " is a misnomer. From this perspective, all governmental interference in free markets creates inefficiencies and are therefore less preferable to private market self-correction. Distortion of markets
Taxation can lead to market distortion. They can artificially change prices thus distorting markets and disturb the way markets allocate scarce resources. Also, taxes can give people incentive to evade them, which is illegal. Minimum price can also result in markets’ distortion (i.e. alcohol, tobacco). Consumer would spend more on harmful good, therefore less of his/her income will be spent on beneficial goods. Subsidies can also lead to misuse of scarce resources as they can help inefficient enterprises by protecting them from free market forces. Administration costs
Enforcement of laws through legal system and tax collection demand considerable costs.