Need for Public SectorPaper Rating: Word Count: 1682 Approx Pages: 7
The modern economy is a mixed system in which public and private sector forces interact together. The economic system is neither public nor private, but involves a mix of both sectors. We cannot deal with public economics only; since the public sector operates in interaction with the private, both sectors enter the analysis.
It's important to note that the market mechanism alone cannot perform all economic functions. Public policy is needed to guide, correct, and supplement it in certain respects.
The reasons behind the need for public sector are:
1) The claim that the market mechanism leads to efficient resource use is based on the condition of competitive factor and product market. So, there must be no obstacles to free entry and consumers and producers must have the full market knowledge. Government regulation may be needed top secure these conditions.
2) It is needed where competition is inefficient due to decreasing cost.
3) Government protection and its provided legal structure are needed for contractual arrangements and market operations.
4) Even if the legal structure is provided and barriers to competition are removed, the prod