EXTERNALITIES, COMMON ACCESS RESOURCES AND PUBLIC GOODS: THE UBIQUITY OF MARKET FAILURE

2022 ◽  
Keyword(s):  
Public Goods ◽  
Market Failure

Grosser Wert und wenig Geld? Über die Honorierung von Waldleistungen | Highly Valuable But Hardly Remunerative? On Compensating Forest Benefits

1999 ◽  
Vol 150 (2) ◽  
pp. 41-48 ◽  
Author(s):  
Ingrid Kissling-Näf
Keyword(s):  
Social Change ◽  
Property Rights ◽  
Social Welfare ◽  
Public Goods ◽  
Market Failure ◽  
Public Funding ◽  
Forest Products ◽  
Marketing Strategies ◽  
Economic Perspective ◽  
Financial Compensation

Forests provide people with a variety of services and products (protection against avalanches, walking trails, etc.). Most forest services and products are not provided by markets and the extent of their availability is often guaranteed by public funding. In this context, the question arises whether the high benefits derived from forests could not be converted into cash more easily. Looking at various explanations for the market failure (externalities, public goods, property rights) possible marketing strategies for forest products and services and how they could optimize social welfare are investigated. Although general compensation criteria are not available, economic concepts (type of externality, scarcity, etc.) provide a first clue as to the necessity of compensation. However, mention must be made that compensation is always the result of a social agreement, and financial compensation as well as property rights are subject to social change. From a political and an economic perspective the payment of compensation for forest benefits is limited.

Designing Ecolabels In Order To Mitigate Market Failures

2005 ◽  
Vol 16 (4) ◽  
pp. 411-430 ◽  
Author(s):  
Douadia Bougherara ◽  
Gilles Grolleau
Keyword(s):  
Asymmetric Information ◽  
Qualitative Study ◽  
Public Goods ◽  
Market Failure ◽  
Jel Classification ◽  
Market Failures ◽  
Cognitive Support

For the market for ecofriendly characteristics of agrofood products to function effectively, means of mitigating asymmetric information, informational overload and public goods properties are necessary. Ecolabel success requires a design and an implementation capable of mitigating simultaneously these three sources of market failures. Our contribution differs from many to date by (1) introducing and analyzing the informational overload as a source of market failure and (2) considering the ecolabel, not only as a tool to re-establish information symmetry between the producer and consumer but also as a way to overcome informational overload and public goods problems. We analyze how these sources of market failures may be mitigated by providing information perceived as trustworthy, tying credence and public attributes to verifiable and private attributes and designing the ecolabel as a cognitive support for consumers. We provide an exploratory qualitative study of several French ecolabels to stress how they more or less succeed in attenuating the identified sources of market failures. Several implications for policymakers and managers are stressed. We conclude by suggesting several issues requiring further investigations. JEL Classification Numbers: D11, D21, L15

scholarly journals Free Riding without Dead Weight Losses

2019 ◽  
Vol 11 (19) ◽  
pp. 5168
Author(s):  
Kwon-Sik Kim ◽  
Seong-ho Jeong
Keyword(s):  
Economic Theory ◽  
Weight Loss ◽  
Public Goods ◽  
Market Failure ◽  
Consumer Surplus ◽  
Free Riding ◽  
Policy Implications ◽  
Dead Weight ◽  
Policy Choices ◽  
Weight Losses

Traditional economic theory assumes that dead weight loss due to free riding on public goods is inevitable. This study demonstrates that free riding without dead weight losses can theoretically exist through Bowen’s model. To this end, this study uses the consumer surplus analysis to present the conditions for free-riding that do not involve dead weight losses, as well as to demonstrate that policy choices that satisfy both the value of efficiency and equity in the supply of public goods are possible. This article formularizes the conditions under which such exceptional cases occur and examines what policy implications the presence of such conditions have in making decisions about the provision of public goods. The discussion of possibility and conditions for free-riding without dead weight losses is significant in that it suggests theoretical and policy implications for policies to raise equity as another important value, not just providing a solution to 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.

Nonoptimal Levels of Suburbanization

10.1068/a3577 ◽  
2003 ◽  
Vol 35 (2) ◽  
pp. 191-198 ◽  
Author(s):  
Philip E Graves
Keyword(s):  
Public Goods ◽  
Market Failure ◽  
Local Public Goods ◽  
Safety Education ◽  
Urban Centers ◽  
Suburban Sprawl ◽  
Valuation Method ◽  
Output Market ◽  
Parallel Input ◽  
The Given

Suburbanization has many causes, among which is the attempt to relocate to acquire a more desirable vector of local public goods. The traditional economists' procedure for valuing public goods involves vertical aggregation of marginal willingness to pay, at a given income level. This approach is flawed by failing to recognize that individuals will not work for goods that cannot be acquired individually with higher incomes. There will be a parallel input market failure any time there is a public good output market failure, thus the ‘given income’ of the traditional valuation method is too low. Hence, traditional valuation methods result in underprovision of local public goods (for example, parks, safety, education, and environmental quality) at the urban centers. As a consequence, there will be nonoptimally large levels of suburban sprawl with substantial resulting welfare loss.

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

The Significance of Public Goods in Market Failure Debates

2020 ◽  
pp. 27-46
Author(s):  
Kubra Onder ◽  
Muhammet Sahin
Keyword(s):  
Public Goods ◽  
Market Failure ◽  
Economic Thought ◽  
Neoclassical Economic ◽  
Main Stream ◽  
Economic Approach ◽  
Failure Theory ◽  
The Subject ◽  
The Government ◽  
Public Economy

Before the emergence of the neoclassical economic approach, the idea that market instabilities are temporary and markets are spontaneously able to reach equilibrium was prevalent. However, with the neoclassical economic thought the idea that market economy alone is far from attaining equilibrium and there is a need for public economy. This is also known as market failure theory. There are many reasons of market failure. One of them is public goods. Public goods are generally regarded as an example of market failure and seen as a problem requiring government intervention. However, when main stream public goods theories are analyzed in-depth, it is seen that there is no agreement on the properties of public goods which may create a reason to the government presentation and public presentation is not approved in general. Therefore, the aim of this study is to make a comparative analysis of the approaches of different economics schools of thought which have contributions to the subject of public goods.

Intellectual Property Justification for Artificial Intelligence

2021 ◽  
pp. 50-72
Author(s):  
Reto M Hilty ◽  
Jörg Hoffmann ◽  
Stefan Scheuerer
Keyword(s):  
Artificial Intelligence ◽  
Intellectual Property ◽  
Public Goods ◽  
Market Failure ◽  
Regulatory System ◽  
Ip Protection ◽  
Current State ◽  
Economic Reasoning ◽  
Per Se ◽  
Theoretical Foundations

Against the backdrop of the current discussion of how AI reshapes certain IP paradigms, this chapter reassesses the need for IP protection in AI markets per se. We assess the question of justification of IP rights for both AI as a tool and AI-generated output in light of the very theoretical foundations of IP protection (from both legal embedded deontological and utilitarian economic standpoints). Traditionally, IP protection is granted due to deontological reasoning, according to which a human creator’s personality and efforts have to be protected, and economic reasoning, according to which exclusive rights in intangible goods have to be established in order to remedy market failure in public goods markets. IP ought to serve as a regulatory system of stimulation of creation and innovation using market forces to achieve this goal. Based on the current state of knowledge, however, it seems that specific market implications of the widespread use of most AI applications may have altered the justification for AI-related IP protection in certain cases. Whereas this seems particularly true regarding AI tools, the case for AI outputs may be different.

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