Senario Asymmetric information is the type of market failure being discussed in the article. The United States of America has an initiative to make tax dodgers pay outstanding money and is asking for the support of financial institutions outside of the United States to cooperate by submitting information on American holder’s financial accounts. Barbados is one of many governments who has agreed to cooperate in this initiative however a cost benefit analysis was done by two economists of University of West Indies Dr Ankie Scott-Joseph and Dr Stephen Harewood. discovered the sharing of information between the two countries is asymmetric. Because the US is the ones in control of this initiative, they may withhold information from Barbados while demanding financial reports from the county. The unfairness of information sharing between both countries will have a greater effect on Barbadians earning income in the United States. (i) Suggest a relevant government policy that would yield the efficient outcome and carefully explain the process through which the implementation of the government policy will lead to the optimal outcome.
Senario
Asymmetric information is the type of market failure being discussed in the article. The United States of America has an initiative to make tax dodgers pay outstanding money and is asking for the support of financial institutions outside of the United States to cooperate by submitting information on American holder’s financial accounts. Barbados is one of many governments who has agreed to cooperate in this initiative however a cost benefit analysis was done by two economists of University of West Indies Dr Ankie Scott-Joseph and Dr Stephen Harewood. discovered the sharing of information between the two countries is asymmetric. Because the US is the ones in control of this initiative, they may withhold information from Barbados while demanding financial reports from the county. The unfairness of information sharing between both countries will have a greater effect on Barbadians earning income in the United States.
(i) Suggest a relevant government policy that would yield the efficient outcome and carefully explain the process through which the implementation of the government policy will lead to the optimal outcome.
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