Government Regulation Focusing upon Demerit Goods: Scope, Occurrence Mechanism and Its Governance

Demerit goods are generally regarded as harmful to the society. Although demerit goods can be freely allocated in competitive markets, society denies their market value from the perspective of ethics, public security and order. Demerit goods regulation focuses more on non-economic objectives and uses various regulatory measures including adopting administrative guidance and information guidance, comprehensively prohibiting and banning specific behaviors, imposing certain restrictions, implementing the administrative permit and approval system, imposing heavy taxes, as well as using the power of punishment. In this way, it is expected to reduce the supply and consumption of demerit goods so as to ensure that social activities can produce the desired results.