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joanne1718 joanne1718
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A week ago

Question 1.

What is the relationship between market failure and government failure?



Question 2.

What is rent seeking and how is it related to regulatory capture?

Textbook 

InMicro


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Answer verified by a subject expert
zachcarytcriszachcarytcris
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A week ago
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Answer 1

Market failure is a case where the market fails to provide the economically optimal outcome. Government failure is a case where the government fails to provide the economically optimal outcome. It is not necessarily the case that governments can always fix market failure.



Answer 2

Rent seeking is the attempt by individuals and firms to use government action to make themselves better off at the expense of others. Regulatory capture is one way of accomplishing rent seeking, as it allows firms to influence a regulatory agency to make decisions that are in the best interest of the firms, even if these actions are not in the public interest.

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