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. |
Thank you for all your good research and resources!
Rohan