Market failures, government failures, and distributional concerns underlie perceived policy problems. Markets offer the potential for efficiently allocating goods. Markets, therefore, provide the yardsticks against which to measure the efficiency of government interventions. In the situation of no market failure, the establishment of market mechanism as a candidate solution for policy problem is considered. The author distinguishes three general categories for taking advantage of private exchange in dealing with policy problems: freeing markets, facilitating markets, and simulationg markets with concept-definition approach and a framework analysis of perceived problems-policy solution-market mechanism-outcome-Pareto efficiency.