Government Intervention: Provision and Information

Beyond taxation, subsidies, and regulation, governments can directly address market failure through two further channels: direct provision of goods and services (the state itself produces and delivers the good) and information provision (campaigns and labelling that help consumers make better-informed choices). These interventions are particularly relevant for public goods, merit goods, and cases of information failure.

Key Definition: Direct provision (or state provision) occurs when the government itself produces and supplies a good or service, often free at the point of use, funded through general taxation.

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Direct Provision

Why Provide Directly?

The government may choose to provide goods directly rather than using taxes or subsidies for several reasons: