Info Provision for market failure

• Information provision


  Government funded information provision that could be through advertising or through education to encourage or to discourage consumption
• Government-funded information provision


  • Billboard advertising
  • Print advertising through newspapers or magazines
  • Radio TV advertising
  • School curriculum changes
  • Adult education through seminars and clinics
• Information provision


  • Trying to encourage more consumption of goods and services or to discourage consumption
  • Focused on solving merit and demerit good market failure where imperfect information is at the heart of the market failure
  • More market friendly and less interventionist/paternalistic than other policies
• How information provision works to fix market failures

  1. For merit goods: Advertising/education shifts demand curve (MPB) to the right, making MPB equal MSB

  2. For demerit goods: Advertising/education shifts demand curve (MPB) to the left, making MPB equal MSB
• Information provision


  Allows consumers to make rational decisions by knowing the true private benefits of consuming merit/demerit goods
• Issues with information provision policy

  • Can be expensive for government
  • No guarantee of success if poorly targeted or consumers ignore it
  • More likely to work in the long run as information is absorbed and consumption habits change
• Information provision is more market friendly and less interventionist/paternalistic than other policies