Market Failure and Welfare Economics - a Justification for Intervention

2008 ◽  
pp. 13-22
Keyword(s):  
Market Failure ◽  
Welfare Economics

Economic Theory and Urban Planning

1975 ◽  
Vol 7 (5) ◽  
pp. 497-508 ◽  
Author(s):  
M J Oxley
Keyword(s):  
Economic Theory ◽  
Urban Planning ◽  
Theoretical Basis ◽  
Market Failure ◽  
Welfare Economics ◽  
Perfect Competition

The lack of a theoretical basis for urban planning is stressed. It is suggested that welfare economics could provide the means for analysing the problems and a framework for developing alternative courses of action. This is achieved by examining the concept of welfare optimisation, the optimality of perfect competition, and the nature of market failure.

scholarly journals Una crítica a la teoría de los fallos del mercado desde la perspectiva de la Escuela Austriaca

2021 ◽  
pp. 133-159
Author(s):  
Ángel Martín Oro
Keyword(s):  
Public Goods ◽  
Imperfect Competition ◽  
Market Failure ◽  
Welfare Economics ◽  
Perfect Competition ◽  
Market Failures ◽  
Failure Theory ◽  
Palabras Clave ◽  
Competitive Model ◽  
Main Criticism

In this paper, we present a critical analysis of the standard market failure theory, one of the most important pillars of economic interventionism. This theory justifies state interference when markets do not produce so-called optimal outcomes; being based on two fundamental concepts of neoclassical welfare economics, namely, Pareto efficiency and perfect competition. The main criticism is directed at the theoretical framework in which is based on, through the contributions of the Austrian School of Economics. To accomplish that, after revising the basics of the market failure theory, we will put forward an alternative concept of efficiency, as well as questioning the suitability of the perfect competitive model. Next, we will reconsider theoretically the traditional market failures, that is, monopolies, public goods and externalities’ problems. This analysis is accompanied by historical cases that illustrate our criticism. Key words: Market failure, welfare economics, efficiency, imperfect competition, public goods, externalities. JEL codes: B53, D60, H00. Resumen: En este trabajo se realiza un análisis crítico de la teoría tradicional de los fallos del mercado, uno de los pilares más importantes del intervencionismo económico. Esta teoría vendría a justificar la interferencia estatal en los casos en que el mercado no produce resultados óptimos; estando apoyada en dos conceptos fundamentales en la economía del bienestar neoclásica: la eficiencia paretiana y el modelo de competencia perfecta. La principal crítica se realizará al marco teórico en el que se inserta, a partir de las aportaciones de la Escuela Austriaca de Economía. Para ello, tras describir a grandes rasgos la teoría de los fallos del mercado, expondremos un concepto alternativo de eficiencia, y nos cuestionaremos la validez teórica del modelo perfectamente competitivo. A continuación, reconsideraremos desde un punto de vista teórico los fallos del mercado tradicionales, esto es: monopolios, bienes públicos y externalidades. Este análisis se acompañará de casos históricos que ilustren y apoyen nuestra crítica. Palabras clave: Fallos del mercado, economía del bienestar, eficiencia, competencia imperfecta, bienes públicos, externalidades. Códigos JEL: B53, D60, H00.

From market failure paradigm to an institutional theory of environmental governance

2009 ◽  
pp. 87-101
Author(s):  
Jouni Paavola
Keyword(s):  
Public Goods ◽  
Institutional Theory ◽  
Environmental Governance ◽  
Market Failure ◽  
Institutional Economics ◽  
Welfare Economics ◽  
Environmental Conflicts ◽  
Physical Setting ◽  
Jel Classifications

- This manuscript examines how an institutional theory of environmental governance might be based on a re-interpretation and re-working of the arguments of the market failure paradigm and its main criticisms. The manuscript first examines in detail the arguments of the market failure paradigm regarding externalities and public goods, as well as their criticisms. The paper then suggests an institutional re-interpretation and revision of the key arguments of the market failure paradigm. The institutional theory of environmental governance acknowledges the interdependence of economic actors and the resulting fundamental role of conflicts as the rationale for environmental governance and its institutions. As environmental conflicts are primarily a matter of distribution rather than of efficiency, it becomes important to understand the likely consequences of institutional alternatives in the specific socio-economic and physical setting of the environmental conflicts, and the degree to which these consequences match with the pertinent social or economic goals.Keywords: environmental governance, market failure, externalities, public goods, welfare economics, institutional economicsJEL classifications: Q50; H41; D62; B52

Government Supply and Government Production Failure: A Framework Based on Contestability

1990 ◽  
Vol 10 (1) ◽  
pp. 1-22 ◽  
Author(s):  
Aidan R. Vining ◽  
David L. Weimer
Keyword(s):  
Policy Analysis ◽  
Conceptual Framework ◽  
Market Failure ◽  
Analytical Framework ◽  
Welfare Economics ◽  
Market Failures ◽  
Positive Theory ◽  
Traditional Market ◽  
Government Production

ABSTRACTA complete conceptual framework for policy analysis requires a theory of government supply and government production failure to complement the well-developed theory of market failure provided by welfare economics. Charles Wolf has made an important start by attempting to draw parallels between market failures and the manifestations of government supply failures. This article provides a more useful analytical framework for government supply failure in two important ways. First, it draws on several perspectives from the economics of organization to sketch both normative and positive theories of government supply. Second, it uses the positive theory of government supply behavior to make direct comparisons with the traditional market failures. It concludes with some implications of the framework for assessing the potential gains from privatization.

Of Pangloss, Pigouvians and Pragmatism: Ronald Coase and Social Cost Analysis

1996 ◽  
Vol 18 (1) ◽  
pp. 96-114 ◽  
Author(s):  
Steven G. Medema
Keyword(s):  
Market Failure ◽  
Welfare Economics ◽  
Social Optimum ◽  
Classical Economics ◽  
Optimal Behavior ◽  
Number Of Factors ◽  
The Social ◽  
Social Interests ◽  
Henry Sidgwick ◽  
Welfare Theory

The laissez-faire welfare theory of classical economics was very much concerned with demonstrating the optimality of the competitive market system, or, more generally, the harmony between individual and social interests. Under the influence of J. S. Mill and Henry Sidgwick, however, this view gradually began to erode. Sidgwick (1901), for example, pointed to a number of factors, including what we now call externalities, that can cause individually-optimal behavior to diverge from the social optimum, and suggested that these potentially call for governmental corrective measures. Alfred Marshall carried this discussion a bit further, but it was through A. C. Pigou's analysis—particularly in The Economics of Welfare (1932)—that the theory of market failure, and the need for government correction of these failures, reached full flower. His work formed the foundation for “modern” welfare economics. The contrast between the “old” and the “modern” welfare economics was pointed out by James Buchanan:

Discontinuous Institutional Alternatives in the Context of Economy Deregulation

2004 ◽  
pp. 94-110 ◽  
Author(s):  
A. Shastitko
Keyword(s):  
Market Failure ◽  
Transaction Management ◽  
Market Failures ◽  
Relative Cost ◽  
State Participation

Various ways of state participation in the mechanisms of transaction management are considered in the article. Differences between compensation and elimination of the market failures are identified. Opportunities and risks of non-regulatory alternatives usage as a mean of market failure compensation are described. Based on classification of goods correlated to relative cost of their useful characteristics evaluation (search, experience, merit) questions of institutional alternatives in three areas (political, financial and commodity) are examined.

Beyond GDP: The Quest for a Measure of Social Welfare. Part II

2012 ◽  
pp. 32-51 ◽  
Author(s):  
M. Fleurbaey
Keyword(s):  
Social Welfare ◽  
Social Relations ◽  
Well Being ◽  
Welfare Economics ◽  
Subjective Well Being ◽  
Alternative Approaches ◽  
Micro Level ◽  
Beyond Gdp

The second part of the paper is devoted to the non-monetary indicators of social welfare. Various approaches to the study of subjective well-being and happiness are described. The author shows what problems a researcher would encounter trying to analyze welfare on the micro-level and to take account of the cognitive and affective aspects of the individuals assessment of their well-being, as well as the relevance of social relations. The author also shows to what extent the alternative approaches, particularly the analysis of functionings and capabilities advanced by A. Sen are compatible to the modern welfare economics and what prospects the latter has.

UK Television Policy and Regulation, 2000–10

2012 ◽  
Vol 9 (4) ◽  
pp. 521-547 ◽  
Author(s):  
Jonathan Hardy
Keyword(s):  
Public Service ◽  
Policy Making ◽  
Market Failure ◽  
Media Content ◽  
Media Ownership ◽  
Communications Policy ◽  
Policy Issues ◽  
Digital Services ◽  
Broadcasting Regulation ◽  
Structural Regulation

Between 2000 and 2010, new institutional arrangements were created for UK broadcasting regulation, built upon a radical rethinking of communications policy. This article examines key changes arising from Labour's media policy, the Communications Act 2003 and the work of Ofcom. It argues that changes within broadcasting were less radical than the accompanying rhetoric, and that contradictory tendencies set limits to dominant trends of marketisation and liberalisation. The article explores these tendencies by reviewing the key broadcasting policy issues of the decade including policies on the BBC, commercial public service and commercial broadcasting, spectrum and digital switchover, and new digital services. It assesses changes in the structural regulation of media ownership, the shift towards behavioural competition regulation, and the regulation of media content and commercial communications. In doing so, it explores policy rationales and arguments, and examines tensions and contradictions in the promotion of marketisation, the discourses of market failure, political interventions, and the professionalisation of policy-making.

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