Government failure occurs when government intervention in the economy creates inefficient results rather than solving market problems. Key causes include:

• Lack of information: Governments often lack the complete data needed to make perfect decisions.
• Incentive problems: Public officials may prioritize personal or political gain over the public interest.
• Unintended consequences: Policies can lead to unexpected negative outcomes that contradict their original goals.
• Regulatory capture: Special interest groups may influence government agencies to act in their favor instead of for the public.
• Time lags: The delay between recognizing a problem and seeing the effect of a policy can make interventions less effective.
• Political priorities: Short-term election cycles may discourage leaders from implementing long-term solutions.