7. Positive economics cannot tell us whether an action should be conducted in the public (market) sector. However, analysis of how both the private and public sectors operate does give insight on the strength of the case for conducting an activity in each sector. When market failure is prevalent, the case for public sector action is strengthened. On the other hand, the expectation of government failure in dealing with a specific economic function reduces the strength of the argument for government intervention. Analysis of both the advantages and shortcomings of economic institutions will help us to develop and choose between the market and public sector alternatives.