Negative Externalities: goverments may apply charges to local authorities for the safe disposal of tyres and refrigirators; there are laws against fly tipping. For chewing gum, information is provided for its disposal. As for Binge Drinking, in some parts of the country, the owners of licensed premises are equired to pay a local levy to provide for police support workers to control revellers.
Positive externalities: This can refer to innoculations; for example they are free, advertisments tend to stress the benefits of a form of vaccination. Goverment training and provision for health and education, and also subsidies for major transport projects such as cross rail, as they are recognizeed for their wider social and economic value.
Merit goods: The provision of information and state provision from tax revenue are two ways in which goverments seek to address the problem of under consumption.
Demerit goods: The provision of impartial regulations and indirect taxes are some ways the government are trying to regulate and reduce their consumption.
Public goods: Government or state provison from general tax revenue, such as in general broadcasting, a charge is made for consumption.
Remember that the extent that the government would go to; to correct market failure largely depends on how concerned they are about a particular market failure and whether it believes that intervention will produce a better allocation of resources.
There are 2 methods involved that can be distinguished when talking about government intervention….
Methods that involve some manipulation of the market mechanism- subsidies,indirect taxation and the provision of information. These are generally referred to as market based solutions.
Non market methods are direct provision and various forms of regulation and control.
sahiljhamb 