Explain With Example The Remedying Information Failures Of Economy?

Let's start with the example. Testing pharmaceuticals drugs is expensive and scientifically complex. The government regulates drugs by allowing the sale of on those drugs, which are proved safe and efficacious. Government also prohibits false and misleading advertising. In both cases, the government is attempting to correct for the market's failure to provide information efficiently.
Much of the regulation of the financial industry swerves the purpose of increasing the quantity and quality of information so that markets can work better. For example, when a company sells stocks or bonds in the United States, it is required to issue copious documentation of its current financial condition and future prospects. This helps protect investors from fraudulent claims about the value of the company's securities. Government requirements are sometimes reinforced by the private sector: companies, which list on the New York Stock Exchange, must comply with an even together set of accounting regulations. Financial regulations are less stringent in other countries, with the consequences that investors often find themselves bilked when companies inflate profits or hide damaging information. Paradoxically, tough reporting standards are beneficial to financial markets because they reduce informational asymmetries between buyers and sellers.