What Should Policy Makers Know When Economists Say 'Market' Failure?
Georgetown Public Policy Review, Vol. 14, No. 1, pp. 27-32, 2009
7 Pages Posted: 15 Dec 2010
Date Written: March 1, 2009
Two of the most recognized and discussed “market” failures in public policy exist when spillover effects on third parties exist to market transactions, and when individuals can enjoy the benefit of a good or service without paying for its provision. In this essay I illustrate these forms of market failures are actually institutional failures to adequately assign property rights. Recognizing this and framing them as a problem of property rights has helped economists and policy makers discover various innovative solutions that were previously overlooked. Policy makers who similarly frame these difficult problems as such, may themselves contribute to the ever expanding domain of new solutions.
Keywords: Market Failure, Property Rights
JEL Classification: A29, H41, H23
Suggested Citation: Suggested Citation