Reasons for government intervention in the market:

1. Provide information and assure information
flows.
2. Combat externalities.
3. Provide public goods.
4. Control non-competitive behavior.
5. Change income destribution.

The first four reasons may be justified because they promote Pareto optimality (efficiency). The fifth reason may be justified also if society desires to guide the economy to a particular Pareto optimal resource allocation, for example, one that is more equitable.

By cheryl