Government Intervention

Government Intervention

Courses Info

Level: AS Levels, A Level, GCSE – Exam Boards: Edexcel, AQA, OCR, WJEC, IB, Eduqas – Economics Revision Notes

Government Intervention

This is the regulatory action taken by government to help resolve any form of market failure

Examples of Government Intervention

  • Competition Authorities and CMA – prevent mergers from happening or intervene to ensure mergers only occur under certain requirements
  • Regulation for the monitoring of prices and price capping – e.g OFGEM (gas and electricity regulator) – impose tariffs and a limit on price increases by firms
  • Private sector involvement in public entities: Private Finance Initiative (PFI) – government intervention to finance large public projects such as the building of schools. Contracting out – using the private sector to provide services such as office cleaning and the management of sports centres. These regulations reduce waste and inefficiencies in the public sector
  • Profit regulation – government can set a maximum percentage profit for firms
  • Regulation for quality standards by issuing a limited quantity of licenses for the markets in which a firm can operate in – to control the competition
  • Regulation to promote competition and contestability – deregulation and privatisation
  • Nationalisation – government takes private firms back into the public sector to protect workers, customers and other stakeholders.

Government Intervention – Topic Links


Quick Fire Questions – Knowledge Check

1. Define ‘Government Intervention’ (2 marks)

2. Identify and explain five types of Government Intervention (10 marks)


Next Revision Topics


A Level Economics Past Papers

Tushar Depala

Author: Tushar Depala

Economics Tutor

View Profile Hire Tushar Depala