Major Government Intervention in Economy

The biggest government intervention in the New Zealand equity markets took place today blocking the Canadian Pension Plan's $1.7 billion bid for 40% of Auckland International Airport. Such a major government intervention begs the question "What economic system drives New Zealand?" Is it still a market economy, or are we moving towards a mixed economy? We are far from a mixed economy and I doubt that we will ever be one ... but its worth a thought. The Asian Tigers have showed that governments can pick winners and they have had a positive effect on their economies (pre 1997).

Government intervention is often justified if the market fails. This is why the government provides health care, justice, defence, education, roading and other social services and infrastructure. If left to the market these services are unlikely to be provided because of free riders, the difficulty in charging individuals, and the often uneconomic provision of merit goods. So what is the market failure that prompted the government to quash the CPP bid?