e provision of free universal immunisation programmes which significantly improved the health of the population as a whole, is one example where governments have used a subsidy to achieve a community benefit. Due to the market's inability to cope with the problems of exteralities, governments have in Buamol's view, found it appropriate to intervene in the market through the application of taxes and subsidies, thus paying producers for the benificial exteralities and charging for the negetive exteralities.It is arguable that externalities are a major factor in questions of equity. In addressing the health care issues of the lower socio-economic groups, Enough to make You Sick, How Income and Environment Affect health. National Health Research Paper No 1 September 1992, made continual references to the fact that the health of an individual was dependant upon the health of the community, and visa-versa.Monopolistic competiion is a further reason for the intervention of governments in the market place. Monopoly (or oligoply) production has the potential for the misallocation of reasources or the distortion of market mechanisms through the fixing of wrong prices.Govenments have attempted to address the failure of the market place through several stratagies...
