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Topic: Market failure

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  Anthony de Jasay, The Failure of Market Failure, Part II. The Public Goods Dilemma: Library of Economics and Liberty
This, in a nutshell, is the public goods dilemma, a form of market failure which requires taxation to overcome it.
However, it is perverse to argue that this is a true case of market failure.
In the standard theories of market failure, the free rider strategy is 'dominant'—it is always the best whatever anyone else may do.
www.econlib.org /library/Columns/y2006/Jasayfailureii.html   (1400 words)

 mnflv1 Foldvary market failure apee
Market failure is a systemic inability of voluntary economic dynamics to provide the ends desired by the public, systemic meaning a failure which is economy-wide and persists over time due to the inherent structure of free markets.
Market failure is therefore the failure of a free market, rather than a market afflicted by governmental or private coercion.
Market failure implies that markets within their ethical constraints are failing to be sustainable, but that is not the case if the ethic that gives the market its meaning also prohibits the destruction of the commons, the atmosphere, oceans, rivers, underground waters, the soil, and the wildlife of the planet.
www.foldvary.net /works/mnflv1.html   (6085 words)

 Economics Geek: What is a market failure?   (Site not responding. Last check: 2007-11-03)
A market failure is any situation in which the completely free operation of markets does not result in a Pareto efficient outcome.
A necessary condition for a market failure to occur is that at least one of the conditions that generate the first fundamental theorem of welfare economics be violated.
Note that under this very precise definition, a market failure is neither a necessary nor a sufficient condition for government intervention in the economy to be warranted.
economicsgeek.blogspot.com /2006/10/what-is-market-failure.html   (1384 words)

 Why Market Failure Fails by Michael S. Rozeff
Textbooks on policy analysis, welfare economics, and cost-benefit analysis are rife with instances of market failure waiting to be molded into efficient shapes by the beneficent and omniscient hands of government legislators and bureaucrats.
Market failure is very big business – people are pulling down big bucks in and out of government based on this one concept.
Markets fail to achieve an efficient outcome when competition is imperfect, when information is incomplete, when there are public goods to be produced, when production induces externalities, or when the markets face uncertainty.
www.lewrockwell.com /rozeff/rozeff79.html   (3016 words)

 Market failure - Wikipedia, the free encyclopedia
In this article, however, the focus is on market failure as defined by mainstream economics.
As could be expected, the issue of market failures (and how they should be addressed) is a source of dispute between different schools of economic thought.
This is different from concepts of "market failure" which focuses on specific situations – typically seen as "abnormal" – where markets have inefficient outcomes.
en.wikipedia.org /wiki/Market_failure   (2179 words)

 Market failure Summary
The possibility of such improvement arises from the existence of market "failures" or "imperfections," which are factors in or features of particular markets that cause private decision-making to produce less-than-optimal economic outcomes.
The market failures now most commonly ascribed to energy markets arise from the nonrivalry and nonexcludability of certain byproducts of energy consumption and production: so-called "environmental externalities,"; or side effects that have deleterious effects on health or welfare.
Market failure is a situation in which markets do not efficiently organize production or allocate goods and services to consumers.
www.bookrags.com /Market_failure   (2535 words)

 Tutor2u - Market Failure - What is Market Failure?
Market failure has become an increasingly important topic for students at A level.There is a clear economic case for government intervention in markets where some form of market failure is taking place.
The existence of monopoly power is often thought to create the potential for market failure and a need for intervention to correct for some of the welfare consequences of monopoly power.
Market failure can also be caused by the existence of inequality throughout the economy.
www.tutor2u.net /economics/content/topics/marketfail/market_failure.htm   (1016 words)

 What Are You Calling Failure? - Mises Institute   (Site not responding. Last check: 2007-11-03)
Market failure, if the term is to mean anything useful, must mean that there are fundamental defects in the nature of human ability to achieve certain goods through voluntary, as opposed to coercive, institutions.
With this definition, the case for market failure is synonymous with the case for government intervention.
In summary, if one is to make the case for market failure, one must show how incentive structures and constraints result in plainly worse outcomes in voluntary institutions of every conceivable stripe when compared to a highly specific coercive institution.
www.mises.org /story/1806   (1334 words)

 Market failure, broadcasting and homogeneous views in the media
Simper had commented at length on a Bureau of Transport and Communications report that contained a segment on 'market failure' that claimed market forces are unlikely to achieve "broadcasting excellence".
'Market failure' (how socialists love that term) is said to occur when voluntary transactions have a harmful effect on a third party.
For the oyster to be fully integrated into the market process fishermen would have had to be given property rights over the oyster beds in the same way that farmers exercise property rights over their lands and livestock.
www.brookesnews.com /040305oysters.html   (1051 words)

 Market Failure and Public Choice
The market was analyzed in terms of what it would do, and compared to government intervention analyzed in terms of what the author wanted it to do.
Thus, if you’re comparing the options of market processes and government intervention on average, you should conclude that market processes are to be preferred to government intervention.
Some reason needs to be given for thinking that the intervention is more cost-effective at preventing or reducing the impact of the market failure than endogenous changes in the market, such as the emergence of new competitors, or in society more broadly, such as the application of boycotts.
personal.bgsu.edu /~roberth/mfail.html   (617 words)

 Market Failure and Government Failure, by Gil Guillory -- anti-state.com
Market failure has been used to describe outcomes resulting from the fact that transmission of information is costly and imperfect; the fact that consumers do not always know whether or not a particular good or service will satisfy their desires; and the fact that there is fraud, default, and reneging among both buyers and sellers.
Market failure in this sense is necessary, but far from sufficient, to make the case for supplanting voluntary action with government action.
In sum, market failure, if the phrase means anything useful, must refer to fundamental defects in the nature of human ability to achieve certain goods through voluntary, as opposed to coercive, institutions.
www.anti-state.com /guillory/guillory3.html   (1066 words)

 Redefining the Market Failure Approach to Fair Use in an Era of Copyright Permission Systems Era of Copyright ...
Recently two appellate courts have twisted the market failure theory of fair use on its head, rejecting the fair use defense largely because of the apparent absence of one type of market failure.
A permission system does nothing to cure the kind of market failure that is more central to the purpose of fair use and the constitutional purpose of copyright: the market failure that occurs when there are significant external benefits associated with a particular use that cannot be internalized in any bargained-for exchange.
If courts are going to employ a market failure approach to fair use, a complete recognition of all the potential types of market failures that can occur relating to uses of copyrighted works is critical to maintaining the appropriate balance in copyright law.
www.lclark.edu /~loren/articles/fairuse.htm   (16767 words)

 PRM 255 Market Failure and Externalities
For market trades to occur, owners of goods must be able to exclude nonowners from using a good unless they pay for the privilege.
Yet the market value of the fish may not be high enough to reward the exclusion effort.
As in the market for a private good, the efficient quantity for a public good is where marginal social benefits equal marginal social costs.
www.msu.edu /course/prm/255/market_failure.htm   (3093 words)

 Economist's View: Market Failure
Thus, I also agree with the conclusion that the correction of market failures and the pursuit of social justice requires government intervention, pressure from interest groups is not enough.
While the market ought to take care of strategic actions on its own since it is in the firm's best interest to put them in place, government action is needed to overcome non-strategic market failures.
Free, unregulated markets are best when it results in an efficient outcome, but the necessary conditions for competition are not met in these markets and oversight is needed to prevent and penalize price manipulation.
economistsview.typepad.com /economistsview/market_failure/index.html   (17363 words)

 Of market failure, IPR and competition
Both, the Intellectual Property law and the competition policy are supposed to correct market failure in the pursuit of economic efficiency.
Some of the major concerns of competition policy in regard to IP rights relate to the market power that is given by granting of such rights, and the harmful effects that it may cause to consumers by allowing prices to be set higher than are needed to secure cost-effective production.
The government should 'ensure free and fair market process' and should 'facilitate easy movement of goods and services' by adopting rules and regulations so that trade and commerce within the country is free and unhindered.
in.rediff.com /money/2006/sep/12guest1.htm   (2543 words)

 The Market Failure Myth - Mises Institute   (Site not responding. Last check: 2007-11-03)
Deviations from optimal prices in markets were responsible for failures to direct resources to their most highly valued uses.
By focusing on efficiency in the use of scarce resources and failures in markets to do so, interventionist-minded economists try to show that their concerns are utilitarian and scientific.
To point to market imperfections as proof of the need for government intervention, he said, is to indulge in the "Nirvana Fallacy," whereby we compare allegedly imperfect real markets to imaginary governmental institutions that lack even the smallest imperfection.
www.mises.org /fullstory.aspx?control=1035   (1332 words)

 Market Failure: Who is to Blame?
In my economics class today we got into a conversation about "Market Failure." Basically, there are certain ailments which can not be alleviated by virtue of the market system itself.
The free market system is set up in such a way that there are incentives to doing these morally wrong acts, and without outside intervention they will become more and more prevalent.
B is "less" of a market failure, but is nonetheless a sign that something is not working the way it should be in an ideal situation.
www.students.bucknell.edu /bmetz/rants/market_failure.htm   (1508 words)

 Abortion and Market Failure Theory by John Cobin, Ph.D.
Such a scenario is deemed a "market failure" in the extant economics literature.
Thus, there is little reason to doubt that some agreement would be reached in the market to deal with unwanted pregnancies without resorting to public policy-especially given the evidence of a extensive network of people who dedicate their time to helping the unborn and the present high demand for adoption services.
Then as institutions also develop to benefit the mother in a pecuniary manner, e.g., she might be paid for selling off pieces of her unborn child, abortion would become more permanent and attractive, and could tend to occur at later stages of gestation.
www.policyofliberty.net /abortion.html   (2250 words)

 Market Power and Dominance
Market share can be measured in several ways, including monetary value, units of sales, units of production and production capacity.
The extent to which established suppliers are constrained by the prospect of new market entry is a key factor in whether the established suppliers have market power.
As is the case for market power generally, market dominance is not a matter of market share alone.
cbdd.wsu.edu /kewlcontent/cdoutput/TR503/page11.htm   (1542 words)

 Government Failure versus Market Failure
Markets "fail" when it is possible to make one person better off without making someone else worse off, thus indicating some degree of inefficiency.
On the other hand, governments "fail" when an economic intervention proves to be unwarranted, either because markets are performing adequately or public policy does not correct a market failure efficiently.
Winston concludes that the cost of government failure may actually be considerably greater than the cost of market failure: "My search of the evidence is not limited to policy failures.
www.brookings.edu /press/books/governmentfailurevsmarketfailure.htm   (460 words)

 Market Failure?
Yet, in the health care market consumers have surrendered their power of choice to state licensing boards, managed care organizations, insurance companies, and to the medical profession, encouraged by self-perpetuating assurances that they are incapable of choosing.
A true market system would also require that patients pay for a significant fraction of the cost of their care, thereby giving them more control in health care settings.
In the medical market, this means prosecuting fraud and (genuine) malpractice, not regulating the industry beforehand or subsidizing hospitals and medical schools.
www.marketmed.org /market.asp?fmmfont=fontsml   (2881 words)

 Myth of Market Failure
Those who cry "market failure" are indubitably right that some of the values they desire would not be made or made in the quantity they desire without the state stepping into the picture.
The market as used here is known by many monikers: the free market, laissez faire, capitalism, free enterprise, free trade, or the market economy.
Rather than grant the opponents of liberty their premise and the use of this destructive phrase, we who believe in capitalism should abandon the flawed terminology of "market failure" and declare forcefully and clearly that "market failure" is a myth.
home.earthlink.net /~rdmadden/webdocs/Myth_of_Market_Failure.html   (2469 words)

 Crisis in Russia - Free Market Failure
Faced with a slump in the West and the collapse of the "market reforms" in Russia, the idea that the "old regime" was more stable and guaranteed their privileges must be making headway among this layer of the bureaucracy.
In place of scientific analysis, they resorted to the old clap-trap about the supposed peculiarities of the Russian people--their patience and alleged ability to put up with suffering, etc. The same nonsense was frequently expressed by left wing intellectuals in Moscow to cover up for their demoralisation and lack of faith in the working class.
But the market is rapidly reaching a point on a world scale where it will come tumbling about their ears.
www.marxist.com /Russia/russiacrisis.html   (10258 words)

 EconLog, Market Failure in HIgher Education?, Arnold Kling: Library of Economics and Liberty
UPDATE 2: I think that one source of market failure could be the fact that government is so heavily intertwined with higher education.
I think that the liberal bias will be corrected by the market, but the market in college education works very slowly - has great inertia.
The market will also bear down on tuition and other costs, if they are indeed excessive (it may be that cost increases merely reflect increased services).
econlog.econlib.org /archives/2006/08/market_failure_1.html   (2461 words)

 Market Failure or Success: The New Debate
Market failure at the microeconomic level, the theory suggests, may even create or aggravate disturbances throughout the economy.
Market Failure or Success: The New Debate brings together the key papers on this new paradigm, including classic papers by Joseph Stiglitz, George Akerlof and Paul David—along with powerful theoretical and empirical rebuttals.
Market Failure or Success is required reading for all who seek to better understand one of the most exciting debates in economics today.
www.independent.org /tii/catalog/cat_market_failure.html   (844 words)

 Human Failure Isn't Market Failure   (Site not responding. Last check: 2007-11-03)
The meltdown of Asian markets, combined with a high-profile hedge fund failure at home, has revived the familiar charge that capitalist greed and pervasive market failure are the sources of economic crisis.
The problem is that it requires ideological blinders to regard the Asian meltdown and the failure of a hedge fund as a crisis of capitalism.
Indeed, since markets entail both profits and losses, it is a demonstration that the market is working as it should.
www.acton.org /ppolicy/editorials/sirico/humanfailure.html   (750 words)

 ERS/USDA Briefing Room - Traceability in the U.S. Food Supply: Industry and Government Response to Market Failure   (Site not responding. Last check: 2007-11-03)
Although firms' balancing costs and benefits usually leads to efficient outcomes, this is not to deny that there are cases of market failure, where the private sector supply of traceability is not the socially optimal amount.
Instances of such market failure could lead to a sub-optimal supply of traceability for product differentiation or for food safety.
In cases where markets supply too little traceability for food safety traceback, a number of industry groups have developed food safety and traceback standards.
www.ers.usda.gov /Briefing/Traceability/marketfailure.htm   (684 words)

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