Government failure refers to the situation where government intervention in the economy or in a specific market fails to achieve its intended goals or creates unintended negative consequences.

Government failure can occur when the government lacks the necessary information or expertise to effectively design and implement policies, or when the government creates incentives that are misaligned with its intended objectives.

Government failure can also occur when the government attempts to intervene in a market that is already functioning efficiently, disrupting the natural operation of the market and leading to negative outcomes. Examples of government failure include policies that create unintended incentives, such as subsidies that lead to overproduction or overconsumption of a particular good or service, or regulations that create barriers to entry that limit competition and lead to higher prices for consumers.