Can government intervention be effective in correcting market failures associated with alcohol? I chose to perform a microeconomic analysis surrounding the effect of alcohol consumption on society. “Can government intervention be effective in correcting alcohol-related market failures? » is the question asked. The model I will explore is that of “market failure”, “where the market mechanism fails to allocate resources efficiently” (Smith et al, 2006, p. 56). The Times “Alcohol-related treatment costs the NHS £1.7 billion. lose an incredible 1.68 million work days due to alcohol-related absence. » The Telegraph shows in a microcosmic way how this problem is prevalent all around us as a society. This is clear from many sources, including “Alcohol Concern”, describing the “epidemic” proportions of the problem. Mark P. Taylor describes economics as “the study of how society manages its scarce resources” (2006, p. 5). The problem is clearly rooted in individual decision-making as well as the analysis of how society allocates its limited resources. The 3 major problems below illustrate the 3 main causes of market failure. Information: Failure to provide good information (a public good) is a major cause of market failure and leads to consumer consequences of alcohol, thereby reducing market efficiency. Evidence suggests that advertising has a significant detrimental effect on consumption, particularly among young people. (Saffer and Dave, 2003). The development of markets promoting alcohol consumption benefits industrial groups, but no such private incentives provide information presenting the negative consequences of consumption. Self-control problems: “1.2 million incidents of violence are alcohol-related” (The Times, 2007) and 360,000 incidents of domestic violence (Simmons, BBC.co.uk) perpetrated show a lack of control. Intervention underway, a four-year government review into the nation's drinking culture has revealed a system that encourages people to drink until they collapse, leading to costs including health for the society as a whole, so that the goods and services provided by the market are not in our best interests costing our society its effectiveness. Externalities: Alcohol (a demerit good and not in the best interests of society) creates private costs for individuals and broader social costs, for example the behavior of intoxicated people in the wider community. An example of this problem is the NHS and medical costs induced by alcohol consumption, which are not borne solely privately by the individual. Above-average medical costs will be partly covered by public funds. It is for this reason alone that there should be a public interest in restricting alcohol consumption. Decision makers do not take into account the cost imposed on society and others as a result of their decision