Consequences of government failure refer to the economic inefficiencies and the loss of social welfare that happen when government intervention does not reach its goals.

Key points include:

• Misallocated resources, which means resources are not used in the most productive way.
• A decrease in innovation because there is less competition.
• Higher tax burdens placed on citizens and businesses.
• Issues caused by limited information, slow decision-making by bureaucrats, and biased regulations.

Understanding these consequences helps experts decide if market-based solutions could be more effective than government action.