Maket Failure and Government Intervention广州出国留学机构
Introduction
Market failure is a situation that occurs when resources are not allocated effectively or efficiently. This economic concept can take a number of forms and appear in a variety of situations, and it is often viewed as something that needs to be corrected through intervention, usually on the part of the government, when it appears in the real world. For example, when fisheries experience market failure, the government is expected to step in with policy decisions that will resolve the issue.
When failure occurs, it means that the system is not Pareto efficient. Pareto efficiency refers to a situation in which any improvement to one area would cau a corresponding harm to someone el. For example, if a fried potato franchi lowers the price on its product, bringing about an improvement for consumers, it would also have to lower the price it pays to potato farmers, thereby causing harm. When a system reaches Pareto efficiency, it means that it is operating at optimum level, with everything in balance.
The question of the proper role of government in the marketplace is an old and fundamental one. Public officials throughout the world grapple with this issue, deciding which public rvices to provide or how to regulate the activities of individuals and firms, a task made more urgent by recent efforts to privatize public responsibilities and “reinvent” government[1]. In the arch for objective standards by which such decisions can be made, public officials have increasingly turned to the concept of market failure. U of the market failure concept is widespread, both in teaching curricula and in practicing government circles. This article demonstrates the limitations of the market failure idea. The shortcomings of the market failure concept have been known for some time, but with little conquence, since its u continues to be widespread. In this article we recount the conceptual problems of the market failure idea. We further show how market failure analysis leads to conclusions about the efficiency of government intervention that are not supported by empirical studies. An alternative economic approach, the concept of transaction costs, buttress this criticism and provides a more well grounded conceptual framework for understanding issues of government intervention.
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In general, transaction costs provide a better method for understanding the nature of collective action, although it is not a diagnostic tool in the same n that the market failure concept purports to be.
因为的英语如你所愿英文Why market failure happens
A fundamental problem with the concept of market failure, as economists occasionally recognize, is that it describes a situation that exists everywhere. While the ubiquity of market failures ems well accepted, the conquences of this obrvation are not. Some people believe this dooms the concept as an analytic tool; others disagree[2].
Market failures are thought to occur when the market fails to produce public goods, or inadvertently produces externalizations, or gives ri to natural monopolies, or dinfranchis parties through information asymmetries, or creates undesirable income distributions. All of the forms are types of externalizations, since each consists of non-monetary effects not taken into account in the decision making process, which is the classic definition of externalizations[3]. Hence, when we charge that the market failure co
小学一年级英语ncept has certain shortcomings, we mean to apply this statement to all forms of externalizations including non-market failures by governmental institutions.
The core argument against market failure analysis is derived from the study of transactions. Externalizations ari when parties engage in transactions. The effect of transactions on market behavior was first analyzed in the 1930s, beginning with an examination of brokerage charges and other costs of exchange [4]. This quickly expanded into an analysis of the relationship between property rights and the cost of transactions. The property rights approach began with an article by R.H. Coa , now well known in the discipline of economics. Coa argued that individuals form firms becau u of the price system is not costless. In other words, entrepreneurs create firms in an effort to reduce the transaction costs associated with using the price system. This approach developed mainly after Coa’s 1960 article on “The Problem of Social Cost” through the work of Alchain ,Demtz , Barzel, Ostrom , Allen and others.success的用法
oltremareperpendicularThe property rights approach is important becau it defines the condition under which ex
goodafternoonternalizations entirely disappear. Transaction costs in this respect are defined as the resources necessary to transfer, establish, and maintain property rights . As property rights become more extensive and complete, transaction costs approach zero.2 In a similar fashion, as transaction costs decline, property rights become more complete as it is cheaper to defend them or transfer property. Only when property rights are perfect do transaction costs vanish. In a zero transaction cost world, with well-specified rights, there would be markets for
everything and all markets would clear , producing efficient outcomes for any collective problem that parties cho to resolve. This condition is expresd by the so-called “weak form” of the Coa Theorem.3 In a world in which property rights are fully specified and in which transaction costs are zero, the allocation of resources will be efficient Zerbe. No such world, of cour, can ever exist. This realization is critical to understanding why the market failure model fails. Conceptually it fails for the following reasons.
