Political Science Essay Example | Topics and Well Written Essays - 500 words - 17

Political Science - Essay Example The state has constitutional power of regulating prices through price floor and ceilings to protect the firms and the consumers (Tanzi 92-7). The government plays a central role in regulating the production and supply of goods services by firms in their different market structure with the focus of ensuring efficient allocation of resources. Taking the case of monopoly firms, the government gives them incentives through different methods to retain their status quo. However, the government still uses pricing policy to influence the monopoly firms’ behavior in terms of output to the consumers. The state set up various institutions that oversee the various economic activities in the country so that working of the economy is consistent with the manpower and resources potential available. Through improved partnership with private sector, the state undertake research and development on various socio-economic variables and the resultant findings are used to establish feasible economic policies that boosts the efficiency of the economy. This includes partnering to develop infrastructure which is an incentive to improved per formance of the market and economy at large. The state is mandated to form bilateral and multilateral trade relations with other countries so that there is labor mobility, exchange of technology and other input factors. This promotes the performance of the economy through increased input factor availability and expanded market for the final products. It is important that the country institute laws that protect local firms from stiff competition of the established multinationals by giving them incentives likes tax holiday, subsidies and infrastructure as this will boost the level of production and performance of the economy. The state needs to include other public welfare issues as part of the market operation processes. In regard to the emerging and ongoing debate on environmental care and