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In an evaluation, discuss how the role and function of budgeting has been utilized to correct externalities and other market failures. Additionally, justify the use of taxpayer resources to correct externalities and other market failures
Thread Outline: Use bolded statements as headings in your thread.
I. Summarize the role of the government in the budget process
II. Analyze the role of the government in correcting externalities and other market failures
III. Justify the use of taxpayer resources to correct externalities and other market failures
Externalities are a consequence of a governmental activity that affects other parties without this being reflected in the cost of the goods or services involved. Externalities by nature often are environmental. Some examples of negative externalities include:
Air pollution
Water pollution
Farm animal production
Passive smoking.
Traffic congestion
Noise pollution
Market failure is an inefficient allocation of resources. Government failure occurs when government intervention results in a more inefficient and wasteful allocation of resources.
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