Abstract The primary goal of this essay is to determine the potential sources of market failure and the necessity for the governmental intervention to solve the issues in the context of the advertisement for kids. In this, instance political intervention remains a need, as it is an only possible way to avoid the failure of the market and protect the fragile minds of the children from the intensive advertising, which includes the violent content. The literature review and the survey revealed that there is a necessity for the improvement of the adequate policies to avoid the disturbances in the formulation of the cognitive development of the children and their perceptions of the world. It is evident that the governmental intervention is essentialities since it contributes to the development of the appropriate regulations of the companies without the violation of the human rights and aggressive promotion. Nonetheless, the government should not continuously intervene in the existing structure of the market, as it will negatively affect the competition in this sector. In this instance, the government intervention should be limited and focused on whether the content of the advertisement adversely influences the intellectual advancement of the children. The policies exist to regulate this issue. They lack the restrictions and have the advisory character in some aspects. However, it is apparent that the promotion of the violence is vehemently restricted. In this instance, the establishment of the new policies remains a necessity. The restrictions have to be also established to the advertisements, which have an adverse effect on the cognitive development of the children. This aspect will reduce the social concern and balance the competition on the market. Introduction It was always questionable whether the advertising for kids is appropriate since children have fragile minds and tend to be easily affected by the bright images on TV and computer screens. It is evident that nowadays children are considered as a separate consumer group, and a high number of companies has a tendency to choose kids as a primary target audience for the advertisement (Nylund, 2015). In this instance, the substantial concern is the vulnerability of the children’s minds and free access to the violent and the pornographic content in the media and the Internet. Nonetheless, the primary source of the market failure is the agency dilemma, which defines that one entity is responsible for the decision-making of the other one (Clarke & Branson, 2012). In the context of the kids advertising, the final decision is dependent on the perceptions of the parent about the product. It is evident the initial message might be misinterpreted, as it is aimed that the other target audience. Another source of the market failure is the fact that the inability to follow the policies in the advertisement leads to the appearance of non-competitive markets. In this instance, the companies, who do not correspond to the rules while advertising for children, create disturbances and cause damage to the flow of the mainstream competition (Rajagopal, 2015). The inability to correspond to the morals rises the social concern, decreases customer’s loyalty to the brand, intensifies the competition, and question the company’s mission and corporate va