nment intervention results in mixed economy, so it is necessary and important to figure out what is the proper role of government in the market economy. Before response to that question, first let me introduce what and who is the government.
3. Government 政府
3.1 The introduction of government
The government is referred to an organization that is established in the area of a country, through political or legal process, through which a political unit exercises its authority, controls and administers public policy, and directs the actions of its members or subjects. In particular, government refers to a civil government of sovereign stat which can be local, national or international [ ].
With the mandatory and monopoly right, and with the power to prescribe, the power to force people take compulsory actions, and punish, it is the government who should be responsible for national defense, social security and stabilization, thus guiding people to pursue the harmony society.
3.2 The introduction of public sector
The public sector consists of many organizations that designed to deal with public allocation of goods and services. Typically, the government plays a vital role in public sector, yet as it is known public is contrary to private, in public sector, goals are always the well-being of the whole nation, not well-being of any certain citizen.
In term of market economy, a small public sector is developed, with the government being relegated to protecting property rights, setting up the framework for transactions including enforcing laws, regulations and orders, sometimes acting as a direct actors in market economy [ ].
What the government should do in market economy and what is the appropriate size of public sector is over debated for years and there is no prevalent accepted answer to it. Later in this paper, I dedicate myself to interpret roles of government based on my own cognition and comprehension, and I have to say it is just one way to explore in this issue.
4. Summary the potential causes for governments intervention 总结政府干预的潜在原因
4.1 Market failure
It is widely recognized, the market economy is led by an invisible hand to promote an end which achieves the private economic efficiency as well as social efficiency. According to Pareto, a resource allocation that has the property that no one can be made better off without someone being made worse off is said to be economic efficient [ ]. Narrowly speaking, the market is efficient basically under two conditions: the markets are perfectly competitive and there are only buyers and sellers affected by the outcome of market matters. However, competition is sometimes far from perfect in the real world and most of times the market transaction has externalities that affect the stand-by as well. In general, we call all this kind of phenomena market failure, which prevent achieving market efficiency.
4.2 Inequity
Even though the invisible hand [ ] of the market place leads market participates (producers and consumers) in a market to maximize their own gain form transactions, at the same time maximize the total benefit that society derives from the market, it can not guarantee a resource allocation be equitable. Moreover, difference in educational opportunities, endowment, born property ownership a
