Open AccessThe concepts of market failure: theory and reality
Author(s) -
Przemysław Leszek
Publication year - 2010
Publication title -
equilibrium
Language(s) - English
Resource type - Journals
eISSN - 2353-3293
pISSN - 1689-765X
DOI - 10.12775/equil.2010.001
Subject(s) - market failure , multitude , economic interventionism , externality , imperfect , intervention (counseling) , government (linguistics) , government failure , perfect information , economics , positive economics , settlement (finance) , law and economics , public economics , microeconomics , political science , politics , law , psychology , linguistics , philosophy , finance , psychiatry , payment
The controversy over the economic activity of government is not a new phenomena, what is reflected in the multitude of publications associated with this issue. Despite the fact that even the substitute of consensus is still a long way, it seems that theorists have reached agreement on two issues, which – although not lead to further settlement – have an effect on the entire course and nature of the dispute. First, economists regardless of the school which they represent, they admit that market failure is a fact. Secondly, the need for intervention by the authorities within the confines of ‘wise and effective economic policy’ is justified because of necessity to correct imperfect market mechanisms. First, we focus on the view concerning market failures, and we attempt to determine the reason that certain facts – such features of the socio-economic system as the existence of externalities or imperfect information – are perceived and classified as failures. Then we demonstrate that even if the market is not functioning properly, this fact does not automatically justify intervention of government.