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  • Essay / Government intervention in national markets - 1175

    Government intervention in national markets. Angola is one of those countries that is full of such examples. It is also full of contradictions and inefficiencies which mean that, most often, these interventions are only temporary or are not fully respected. Angola's socialist-turned-capitalist market is full of regulated areas in which the government has intervened directly, much to the dismay of the market. I remember a time when you couldn't import tires into the country because Mabor, the country's tire production factory, had a monopoly on the tire market. If a private company wanted to import tires, it had to require authorization from Mabor, which most often resulted in a refusal, or a request for commission on the importation was not uncommon either. after Mabor stopped producing until the law was finally repealed and companies can now import tires at will, but this law must be less than 2-3 years old (!!) because I had a friend who got into trouble with the law over a container full of tires that did not have Mabor's permission to enter the country. The main objectives of government intervention Generally speaking, governments intervene in the market for two main reasons: "social efficiency and equity". [1] We would not expect to see a government intervene in the economy to favor a business, or because the government would benefit from such intervention in the same way that a business receives profit (except perhaps voters' positive perception of the intervention). Social effectiveness is related to the concept of government intervention in a situation where the costs associated with a business or a number of businesses acting in a specific way outweigh its benefits. We could say, for the sake of accuracy, that we achieve social efficiency when “the marginal benefits to society – or marginal social benefits (MSB) – of the production of a given good or service exceed the marginal costs to society or marginal social costs (MSC). " [2] Equity, on the other hand, is related to the distribution of wealth. A quick definition might be that "equity is where income is distributed in a way that is considered fair or just [3] This is easily seen in the struggle of women to obtain equal pay to men when performing the same tasks. Laws are in place in some countries to prevent this discrimination from occurring. income distribution is equal and fair between men and women..