Types of government intervention

Type of intervention	Description	Example	Advantage	Disadvantage
Direct Provision	Governments can supply public and merit goods directly to consumers free of charge.	In the UK, primary school education, visits to the doctor and roads are provided free of charge.	The government directly controls the supply of goods and services. E.g. It decides how many soldiers there are as it pays them directly.	May potentially be inefficient  if the government produces the good itself.
Subsidised Provision	The Government can pay for part of the good or service (a subsidy) but expect consumers to pay the rest.	Prescriptions or dental care are subsidised in this way in the UK.	Would increase the amount of the good or service, potentially to a level of which that maximises economic welfare.	The decision about the level of subsidy can be ‘captured’ by producers, and so become too large to maximise economic welfare.
Regulation	The Government may leave provision to the private sector but force consumers to provide a merit good.	Motorists are forced to buy car insurance by law.	Requires little or no taxpayers’ money to provide the good. Consumers are likely to be able to shop around in the free market for a product which gives them good value, ensuring productive and allocative efficiency.	Can impose heavy costs on a poor society. Regulations can also be ignored. If some parents had a legal obligation to pay for their children to go to school, some parents would defy the law and not give their children an education.