OverviewGovernments produce roughly one third of all economic activity in Australia. But the influence of government is wider, extending to every household and every firm in the country through service provision, regulations and taxes. The role of government is critically important in promoting national productivity and therefore living standards, in dealing with market failures, in achieving an equitable access to goods and services, and in promoting national economic stability. This book, Government in a Market Economy, looks at a wide range of applications and case studies of government activity through the lens of economic analysis. It asks: why is government involved in a given economic activity and how can government intervention improve economic wellbeing? The scope of the book is broad, from the government's role in correcting a range of market failures and redistributing income, to managing the macro economy. There are questions for research and discussion at the end of each 'topic'. The book is suited for two purposes: it provides public sector managers with an economic way of thinking about public sector activity, and it is a resource for university courses in introductory economics, public economics, applied microeconomics and public policy.