Extract D states that: 'Critics of state-directed green industrial policies argue that transition pathways must be determined by market price signals, and that massive public subsidies for domestic battery gigafactories and offshore wind farms risk misallocating scarce capital, shielding inefficient firms from competition, and triggering global trade disputes.'
Using the data and your knowledge of economics, evaluate the view that governments should avoid providing subsidies or financial support to green technology industries, such as electric vehicle battery manufacturing and renewable energy generation.
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.