Government Impact on the Business Environment

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Government Impact on the Business Environment

• Week 5

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Learning outcomes

• By the end of the class, the student will
• Understand the reasons by government intervenes
  in the business environment
• Understand the range of tools available to
  government
• Apply this knowledge to the case

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Why does government intervene

• Efficiency and market failure
• Macroeconomic stabilization
• Other

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Efficiency and market failure

• Imperfect competition
• Public goods
• Externalities
• Information problems

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Macroeconomic stabilization and economic growth

• 3 basic facts
• Governments response

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Other

• National security
• Culture/multiculturalism
• Paternalism
• Fairness and equity
• Votes
• Favoured son
• Regional development

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Tools

• Direct expenditures
• Taxes
• Regulation
• Tax expenditures

• Loans, subsidies, loan guarantees
• Equity interests
• Suasion

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Implications for managers

• Creation of threats and opportunities

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Conclusion

• By the end of the class, the student will
• Understand the reasons by government intervenes
  in the business environment
• Understand the range of tools available to
  government
• Apply this knowledge to the case