Economics: A Very Short Introduction (Very Short Introductions) by Partha Dasgupta

Author:Partha Dasgupta [Dasgupta, Partha]
Language: eng
Format: epub, pdf
Publisher: Oxford University Press
Published: 2007-02-21T16:00:00+00:00

Even if we were to leave distributional issues aside, markets don’t operate ideally in the world we know. Why? Three reasons stand out. First, as the production of public goods is vulnerable to the free-riding problem, markets are less than effective in supplying them. That said, there are deeper problems than ‘free-riding’ in the case of public goods. Take the rule of law, which is a public good. In the absence of the rule of law markets couldn’t function (Chapter 2), which means that it would be absurd to allow it to be a marketable commodity. There are also cases involving environmental services (Chapter 7), where market transactions create externalities that can’t be eliminated no matter how audaciously the state tries to redefine private property rights.

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