Monday 28 December 2015

How government and firms do things differently?

Government likes to enter the market with full details, known strategies and very clear plans. Once an act is passed and put into action, the act is not flexible and it usually requires more paperwork to amend the act than creating the act. However, firms usually enter the market with relatively limited information (especially when they enter a new market) and some new ideas. They are very flexible as they have to adopt themselves to the market changes. Therefore, government is easier to intervene the traditional industries effectively, as the changes in such markets are more predictable. When the market is changing rapidly, the government intervention could be much less effective.

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