A municipal authority introduces a daily congestion charge for high-emission vehicles entering a city centre to reduce air pollution and traffic delays. This policy would inevitably result in government failure if
retailers inside the zone report a decline in footfall and sales revenue following the implementation of the charge.
the total social costs of the scheme, including administrative expenses and diverted traffic externalities, exceed the total social benefits.
the net revenue generated from the congestion charge is less than the capital cost of installing the camera infrastructure in the first year.
the average reduction in particulate matter (PM2.5PM_{2.5}PM2.5) levels is only half of what environmental models had predicted.
378 exam-style questions on AQA A Level Economics 1.8 The market mechanism, market failure and government intervention in markets, covering 1.8.1 How markets and prices allocate resources, 1.8.2 The meaning of market failure, 1.8.3 Public goods, private goods and quasi-public goods, 1.8.4 Positive and negative externalities in consumption and production, 1.8.5 Merit and demerit goods, 1.8.6 Market imperfections, 1.8.7 Competition policy (A-level only), 1.8.8 Public ownership, privatisation, regulation and deregulation of markets (A-level only), 1.8.9 Government intervention in markets, and 1.8.10 Government failure. Each one has a worked solution and a mark scheme showing where the marks go.