Market intervention

A market intervention is a policy or measure that modifies or interferes with a market, typically done in the form of state action, but also by philanthropic and political-action groups. Market interventions can be done for a number of reasons, including as an attempt to correct market failures,^[1] or more broadly to promote public interests or protect the interests of specific groups.

Economic interventions can be aimed at a variety of political or economic objectives, including but not limited to promoting economic growth, increasing employment, raising wages, raising or reducing prices, reducing income inequality, managing the money supply and interest rates, or increasing profits. A wide variety of tools can be used to achieve these aims, such as taxes or fines, state owned enterprises, subsidies, or regulations such as price floors and price ceilings.

Examples of market interventions

Market interventions include:

• Bailouts pay (usually tax) money to people or organizations in financial difficulty;^[2] bail-ins transfer organizations from the ownership of their former shareholders to that of their creditors, cancelling the debt.
• Competition laws aim to increase competition and prevent monopoly and oligopoly^[3]
• Copyright is a legal monopoly granted on creative works
• Minimum wages legislatively limit the lowest pay level
• Monetary policy is manipulating the supply of money to attain economic goals; usually done by governments, as they are the ones that typically control currencies
• Nationalization transfers a privately held thing into government ownership
• Non-tariff barriers to trade restrict imports and exports by method other than direct taxes
• Patents are legal monopolies granted on practical inventions
• Privatization transfers a government-held thing into private ownership
• Quantitative easing occurs when the government buys government bonds, raising their price and lowering the return per unit price to people and institutions buying government bonds.
• Regulation bans, limits, or requires some market activities
• Subsidies and market/government incentives pay money to produce some desired change in recipients^[4]
  • Cross subsidization and feebates are subsidies funded by a linked tax
• Welfare is government support to individuals, in cash or in kind, often directed at basic needs

Levies

• Bank levies are when banks are required to give one-off payments to governments
• Capital levies require people or institutions to pay a one-time taxlike payment, to the government or some institution the government wishes to support; often paid only if above a certain level of wealth

Taxes

Taxes are also market interventions.

References