With respect to government regulation and market failure, is the cure of a disease worse than the disease? Explain

When an economy is experiencing market failure, when markets fail to attain their potentials, the government often intervenes through policies and regulations that are supposed to make the markets efficient again. In this case, the cure of the disease is worse than the disease. In most situations, the government's intervention when there is a market failure leaves the citizens of a country in a worse state than they already were.

The reason for government regulations being worse than the market failure is the lag the regulations take before they get implemented. To start with, it takes a while for the government bodies to spot inefficiency in the market place, and once spotted, some other time to understand it and formulate policies that will help rid the problem, then some other chain of processes, before one knows it, the government regulations have taken so much time before they are put in effect. Meanwhile, the consumers use their forecasts based on their knowledge and may predict the wrong market outcome, creating more problems. Hence, the cure of the disease is worse than the disease in respect to market failure.