Market Failure

Edited by Stephen Martin, Professor of Economics, Purdue University, West Lafayette, Indiana, US

• Contents:Volume IIntroduction Stephen MartinPART IPRECURSORS 1. Jacob Viner (1927), ‘Adam Smith and Laissez Faire’, Journal of Political Economy, 35 (2), April, 198–2322. John Stuart Mill ([1909] 1976), ‘Of the Grounds and Limits of the Laisser-Faire or Non-Interference Principle’, in Principles of Political Economy: With Some of Their Applications to Social Philosophy, edited with an Introduction by Sir William Ashley, 2nd edn, Book V, Chapter XI, Fairfield, NJ, USA: Augustus M. Kelley Publishers, 941–79, appendices3. J. E. Cairnes (1873), ‘Political Economy and Laissez-Faire’, in Essays in Political Economy: Theoretical and Applied, Chapter VII, London, UK: Macmillan and Co., 232–64 4. Henry Sidgwick ([1901] 1969), ‘The System of Natural Liberty Considered in Relation to Production’ and ‘The Relations of Government to Industry’, in The Principles of Political Economy, 3rd edn, Book III, Chapter II and Chapter III, London, UK and New York, NY, USA: Macmillan and Co., 399–4365. A. C. Pigou (1920), ‘Divergences between Marginal Social Net Product and Marginal Trade Net Product’, in The Economics of Welfare, Part II, Chapter VI, London, UK: Macmillan and Co., 149–796. John Maynard Keynes ([1931] 1972), ‘The End of Laissez-Faire’, in The Collected Writings of John Maynard Keynes: Volume IX, Essays in Persuasion, Part IV, Chapter 2, London and Basingstoke, UK: Macmillan St. Martin’s Press for the Royal Economic Society, 272–94 7. Howard S. Ellis and William Fellner (1943), ‘External Economies and Diseconomies’, American Economic Review, XXXIII (3), September, 493–5118. Lionel Robbins ([1952] 1965), 'The Economic Functions of the State', in The Theory of Economic Policy in English Classical Political Economy, reprint edn, Lecture II, London, UK: Macmillan and Co., 34–679. E. J. Mishan (1971), ‘The Postwar Literature on Externalities: An Interpretive Essay’, Journal of Economic Literature, 9 (1), March, 1–28[28]PART IIIDEAL MARKETS10. Kenneth J. Arrow (1974), ‘General Economic Equilibrium: Purpose, Analytic Techniques, Collective Choice’, American Economic Review, 64 (3), June, 253–7211. Alan Kirman (2011), ‘Introduction’, in Complex Economics: Individual and Collective Rationality, Chapter 1, Abingdon, UK and New York, NY, USA: Routledge, 1–34, referencesPART III MARKET FAILURE12. Francis M. Bator (1958), ‘The Anatomy of Market Failure’, Quarterly Journal of Economics, 72 (3), August, 351–7913. Kenneth J. Arrow (1969), ‘The Organization of Economic Activity: Issues Pertinent to the Choice of Market versus Nonmarket Allocation’, in The Analysis and Evaluation of Public Expenditures: The PBB System: A Compendium of Papers Submitted to the Subcommittee on Economy in Government of the Joint Economic Committee, Congress of the United States, Volume I, 91st Congress: 1st Session, Washington, DC, USA: United States Government Printing Office, 47–6414. David M. Newbery (1989), ‘Missing Markets: Consequences and Remedies’, in Frank Hahn (ed.), The Economics of Missing Markets, Information, and Games, Part III, Chapter 10, New York, NY, USA: Oxford University Press, 211–42PART IV SOURCES OF MARKET FAILUREA. Externalities15. R. H. Coase (1960), ‘The Problem of Social Cost’, Journal of Law and Economics, III, October, 1–4416. Deirdre McCloskey (1998), ‘The So-Called Coase Theorem’, Eastern Economic Journal, 24 (3), Summer, 367–7117. Robert Cooter (1982), ‘The Cost of Coase’, Journal of Legal Studies, XI (1), January, 1–3318. James M. Buchanan (1986), ‘Rights, Efficiency, and Exchange: The Irrelevance of Transactions Cost’, in Liberty, Market and State: Political Economy in the 1980s, Part Two, Chapter 10, New York, NY, USA: New York University Press, 92–107B. Fables – or Not: Bees19. J. E. Meade (1952), ‘External Economies and Diseconomies in a Competitive Situation’, Economic Journal, 62 (245), March, 54–6720. Steven N. S. Cheung (1973), ‘The Fable of the Bees: An Economic Investigation’, Journal of Law and Economics, 16 (1), April, 11–3321. David B. Johnson (1973), ‘Meade, Bees, and Externalities’, Journal of Law and Economics, 16 (1), April, 35–52 C. Fables – or Not: Lighthouses22. Paul A. Samuelson (1964), ‘Economic Role of Government’, ‘Social and Private Wants: Extreme Laissez Faire’, ‘Social Wants in Real Life’ and ‘Appendix: External Economies and Diseconomies’, in Economics: An Introductory Analysis, 6th edn, excerpts from Chapter 3, Chapter 8 and Chapter 22, New York, NY, USA: McGraw-Hill Book Company, 44–45, 157–60, 465–6623.R. H. Coase (1974), ‘The Lighthouse in Economics’, Journal of Law and Economics, 17 (2), October, 357–76 24. David E. Van Zandt (1993), ‘The Lessons of the Lighthouse: “Government” or “Private” Provision of Goods’, Journal of Legal Studies, XXII (1), January, 47–7225. Victor P. Goldberg (1981), ‘Pigou on Complex Contracts and Welfare Economics’, in Richard O. Zerbe, Jr. (ed.), Research in Law and Economics: Volume 3, Greenwich, CT, USA and London, UK: JAI Press, 39–51Volume II AcknowledgementsIntroduction An introduction to all three volumes by the editor appears in Volume IPART I PUBLIC GOODS1. Paul A. Samuelson (1954), ‘The Pure Theory of Public Expenditure’, Review of Economics and Statistics, 36 (4), November, 387–892. Paul A. Samuelson (1955), ‘Diagrammatic Exposition of a Theory of Public Expenditure’, Review of Economics and Statistics, 37 (4), November, 350–563. Kenneth J. Arrow and Robert C. Lind (1970), ‘Uncertainty and the Evaluation of Public Investment Decisions’, American Economic Review, 60 (3), June, 364–78PART II INFORMATION 4. F. A. Hayek (1945), ‘The Use of Knowledge in Society’, American Economic Review, XXXV (4), September, 519–305. George A. Akerlof (1970), ‘The Market for “Lemons”: Quality Uncertainty and the Market Mechanism’, Quarterly Journal of Economics, 84 (3), August, 488–5006. Kenneth J. Arrow (1974), ‘Limited Knowledge and Economic Analysis’, American Economic Review, 64 (1), March, 1–107. Bruce C. Greenwald and Joseph E. Stiglitz (1986), ‘Externalities in Economies with Imperfect Information and Incomplete Markets’, Quarterly Journal of Economics, 101 (2), May, 229–64 8. Joseph Farrell (1987), ‘Information and the Coase Theorem’, Journal of Economic Perspectives, 1 (2), Fall, 113–29PART III IMPERFECT COMPETITION AND REGULATION 9. Nicholas Kaldor (1935), ‘Market Imperfection and Excess Capacity’, Economica, 2 (5), February, 33–5010. Donald H. Wallace (1936), ‘Monopolistic Competition and Public Policy’, American Economic Review: Papers and Proceedings, 26 (1), March, 77–8711. Michael Spence (1976), ‘Product Selection, Fixed Costs, and Monopolistic Competition’, Review of Economic Studies, 43 (2), June, 217–3512. N. Gregory Mankiw and Michael D. Whinston (1986), ‘Free Entry and Social Inefficiency’, RAND Journal of Economics, 17 (1), Spring, 48–5813. Tibor Scitovsky (1950), ‘Ignorance as a Source of Oligopoly Power’, American Economic Review: Papers and Proceedings, 40 (2), May, 48–5314. Gordon Tullock (1967), ‘The Welfare Costs of Tariffs, Monopolies, and Theft’, Western Economic Journal, 5 (3), June, 224–3215. Henry C. Simons (1936), ‘The Requisites of Free Competition’, American Economic Review: Papers and Proceedings, 26 (1), March, 68–7616. William Mark Crain and Robert B. Ekelund, Jr. (1976), ‘Chadwick and Demsetz on Competition and Regulation’, Journal of Law and Economics, 19 (1), April, 149–6217. Oliver E. Williamson (1976), ‘Franchise Bidding for Natural Monopolies – in General and with Respect to CATV’, Bell Journal of Economics, 7 (1), Spring, 73–10418. Martin K. Perry (1984), ‘Scale Economies, Imperfect Competition, and Public Policy’, Journal of Industrial Economics, XXXII (3), March, 313–3319. David E. M. Sappington and Joseph E. Stiglitz (1987), ‘Information and Regulation’, in Elizabeth E. Bailey (ed.), Public Regulation: New Perspectives on Institutions and Policies, Part I, Chapter 1, Cambridge, MA, USA and London, UK: MIT Press, 3–4320. Joseph Stiglitz (2009), ‘Regulation and Failure’, in David Moss and John Cisternino (eds), New Perspectives on Regulation, Chapter I, Cambridge, MA, USA: The Tobin Project, 11–23PART IVINSTANCES OF MARKET FAILURE: THE COMMONS 21. H. Scott Gordon (1954), ‘The Economic Theory of a Common-Property Resource: The Fishery’, Journal of Political Economy, 62 (2), April, 124–4222. Mancur Olson (1965), ‘A Theory of Groups and Organizations’, in The Logic of Collective Action: Public Goods and the Theory of Groups, Chapter I, Cambridge, MA, USA and London, UK: Harvard University Press, 5–5223. Elinor Ostrom (2000), ‘Collective Action and the Evolution of Social Norms’, Journal of Economic Perspectives, 14 (3), Summer, 137–58PART VINSTANCES OF MARKET FAILURE: THE ENVIRONMENT24. Allen V. Kneese and Ralph C. d’Arge (1969), ‘Pervasive External Costs and the Response of Society’, in The Analysis and Evaluation of Public Expenditures: The PPB System: A Compendium of Papers Submitted to the Subcommittee on Economy in Government of the Joint Economic Committee Congress of the United States, Volume I, 91st Congress: 1st Session, Washington, D.C., USA: United States Government Printing Office, 87–11525. William D. Nordhaus (1973), ‘The Allocation of Energy Resources’, Brookings Papers on Economic Activity, 3, 529–7626. Robert M. Solow (1974), ‘The Economics of Resources or the Resources of Economics’, American Economic Review: Papers and Proceedings, 64 (2), May, 1–1427. A. Michael Spence (1974), ‘Blue Whales and Applied Control Theory’, in Hans Werner Gottinger (ed.), Systems Approaches and Environmental Problems, Göttingen, Germany: Vandenhoeck and Ruprecht, 97–12728. Paul A. Samuelson (1976), ‘Economics of Forestry in an Evolving Society’, Economic Inquiry, XIV (4), December, 466–9229. Martin L. Weitzman (2013), ‘Tail-Hedge Discounting and the Social Cost of Carbon’, Journal of Economic Literature, 51 (3), September, 873–8230. Steven G. Medema (2014), ‘The Curious Treatment of the Coase Theorem in the Environmental Economics Literature, 1960–1979’, Review of Environmental Economics and Policy, 8 (1), Winter, 39–57PART VIINSTANCES OF MARKET FAILURE: INNOVATION 31. Kenneth J. Arrow (1962), ‘Economic Welfare and the Allocation of Resources for Invention’, in Universities-National Bureau Committee for Economic Research and Committee on Economic Growth of the Social Science Research Council (eds), The Rate and Direction of Inventive Activity: Economic and Social Factors, Part VI, Princeton, NJ, USA: Princeton University Press and New York, NY, USA: National Bureau of Economic Research, 609–2632. Robert Van Horn and Matthias Klaes (2011), ‘Chicago Neoliberalism versus Cowles Planning: Perspectives on Patents and Public Goods in Cold War Economic Thought’, Journal of the History of the Behavioral Sciences, Special Issue: The Human Sciences and Cold War America, 47 (3), Summer, 302–2133. Stephen Martin and John T. Scott (2000), ‘The Nature of Innovation Market Failure and the Design of Public Support for Private Innovation’, Research Policy, 29 (4–5), April, 437–4734. Bronwyn H. Hall, Albert N. Link and John T. Scott (2003), ‘Universities as Research Partners’, Review of Economics and Statistics, 85 (2), May, 485–91PART VIIINSTANCES OF MARKET FAILURE: OTHERA. Health Care35. Kenneth J. Arrow (1963), ‘Uncertainty and the Welfare Economics of Medical Care’, American Economic Review, LIII (5), December, 941–73B. Insurance36. Michael Rothschild and Joseph Stiglitz (1976), ‘Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information’, Quarterly Journal of Economics, 90 (4), November, 629–49 C. Financial Markets37. Joseph E. Stiglitz (1994), ‘The Role of the State in Financial Markets’, in Michael Bruno and Boris Pleskovic (eds), Proceedings of the World Bank Annual Conference on Development Economics 1993: Supplement to The World Bank Economic Review and The World Bank Research Observer, Washington, D.C., USA: International Bank for Reconstruction and Development and The World Bank, 19–5238. Richard A. Posner (2009), ‘The Underlying Causes’, in A Failure of Capitalism: The Crisis of ’08 and the Descent into Depression, Chapter 3, Cambridge, MA, USA and London, UK: Harvard University Press, 75–116Index[ILCWE: Market Failure: Volume III - Stephen Martin29.01.2019]Contents------------------------------------------------------------------------------------------------------------------------ AcknowledgementsIntroduction An introduction to all three volumes by the editor appears in Volume IPART I COPING MECHANISMS: THE FIRM [354 pp]1. R. H. Coase (1937), ‘The Nature of the Firm’, Economica, 4 (16), November, 386–405[20]2.Steven N. S. Cheung (1983), ‘The Contractual Nature of the Firm’, Journal of Law and Economics, XXVI (1), April, 1–21[21]3.Oliver E. Williamson (1971), ‘The Vertical Integration of Production: Market Failure Considerations’, American Economic Review: Papers and Proceedings, 61 (2), May, 112–23[12]4.Alfred D. Chandler, Jr. (1977), ‘Introduction: The Visible Hand’, in The Visible Hand: The Managerial Revolution in American Business, Cambridge, MA, USA and London, UK: Belknap Press of Harvard University Press, 1–12, notes[12]5.R. H. Coase (1988), ‘The Nature of the Firm: Meaning’, Journal of Law, Economics, and Organization, 4 (1), Spring, 19–32[14]6.Douglass C. North (1985), ‘Transaction Costs in History’, Journal of European Economic History, 14 (3), Winter, 557–76[20]7.Oliver E. Williamson and William G. Ouchi (1981), ‘The Markets and Hierarchies and Visible Hand Perspectives: The Markets and Hierarchies Program of Research: Origins, Implications, Prospects’, in Andrew H. Van de Ven and William F. Joyce (eds), Perspectives on Organization Design and Behavior, Part I, Chapter 8, New York, NY, USA: John Wiley and Sons, 347–70[24]8.John C. McManus (1975), ‘The Costs of Alternative Economic Organizations’, Canadian Journal of Economics, VIII (3), August, 334–50[17]9.Oliver E. Williamson (1991), ‘Comparative Economic Organization: The Analysis of Discrete Structural Alternatives’, Administrative Science Quarterly, 36 (2), June, 269–96[28]10.Scott E. Masten, James W. Meehan, Jr. and Edward A. Snyder (1991), ‘The Costs of Organization’, Journal of Law, Economics, and Organization, 7 (1), Spring, 1–25[25]11. Christos Pitelis (1995), ‘On the Nature of the Firm’, in Arjen van Witteloostuijn (ed.), Market Evolution: Competition and Cooperation, Part I, Chapter 2, Dordrecht, the Netherlands: Kluwer Academic Publishers, 11–37[27]12.Richard O. Zerbe, Jr. and Howard E. McCurdy (1999), ‘The Failure of Market Failure’, Journal of Policy Analysis and Management, 18 (4), Autumn, 558–78[21]13.Matthias Klaes (2000), ‘The History of the Concept of Transaction Costs: Neglected Aspects’, Journal of the History of Economic Thought, 22 (2), June, 191–216[26]14.Paul L. Joskow (1988), ‘Asset Specificity and the Structure of Vertical Relationships: Empirical Evidence’, Journal of Law, Economics, and Organization, 4 (1), Spring, 95–117[23]15.Steven N. S. Cheung (1969), ‘Transaction Costs, Risk Aversion, and the Choice of Contractual Arrangements’, Journal of Law and Economics, 12 (1), April, 23–42[20]16.G. B. Richardson (1972), ‘The Organisation of Industry’, Economic Journal, 82 (327), September, 883–96[14]17.Benjamin Klein, Robert G. Crawford and Armen A. Alchian (1978), ‘Vertical Integration, Appropriable Rents, and the Competitive Contracting Process’, Journal of Law and Economics, 21 (2), October, 297–326[30]PART IICOPING MECHANISMS: INSTITUTIONS [58 pp]18. Douglass C. North and Robert Paul Thomas (1970), ‘An Economic Theory of the Growth of the Western World’, Economic History Review, XXIII (1), April, 1–17 [17] 19.Douglass C. North (1994), ‘Economic Performance Through Time’, American Economic Review, 84 (3), June, 359–68[10]20.Oliver E. Williamson (1975), ‘Toward a New Institutional Economics’, in Markets and Hierarchies: Analysis and Antitrust Implications: A Study in the Economics of Internal Organization, Chapter 1, New York, NY, USA: The Free Press, 1–19, references[19]21.Oliver E. Williamson (1985), ‘Prologue’, in The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting, New York, NY, USA: The Free Press, 1–12[12]PART III COPING MECHANISMS: PROPERTY [69 pp]22.F. H. Knight (1924), ‘Some Fallacies in the Interpretation of Social Cost’, Quarterly Journal of Economics, 38 (4), August, 582–606[25]23.Armen A. Alchian (1967), ‘Pricing and Society’, Occasional Paper 17, London, UK: Institute of Economic Affairs, 5–22[18]24. Eirik G. Furubotn and Svetozar Pejovich (1972), ‘Property Rights and Economic Theory: A Survey of Recent Literature’, Journal of Economic Literature, 10 (4), December, 1137–62 [26]PART IV COPING MECHANISMS: THE STATE [135 pp]25. William J. Baumol (1952), ‘Economic Theory and the Theory of the State’, in Welfare Economics and the Theory of the State, Part II, Chapter 12, Cambridge, MA, USA: Harvard University Press for the London School of Economics and Political Science, 140–56 [17]26.George J. Stigler and Paul A. Samuelson (1968), ‘A Dialogue on the Proper Economic Role of the State’, Selected Papers No. 7, third printing, Chicago, IL, USA: University of Chicago Booth School of Business, i, 1–39[40]27.Joseph E. Stiglitz (1991), ‘The Economic Role of the State: Efficiency and Effectiveness’, in T. P. Hardiman and Michael Mulreany (eds), Efficiency and Effectiveness in the Public Domain, Dublin, Ireland: Institute of Public Administration, 37–59[23]28.Dennis C. Mueller (2003), ‘The Reason for Collective Choice – Allocative Efficiency’, in Public Choice III, Part I, Chapter 2, New York, NY, USA: Cambridge University Press, 9–43[35]29.Dennis C. Mueller (2003), ‘The Reason for Collective Choice – Redistribution’, in Public Choice III, Part I, Chapter 3, New York, NY, USA: Cambridge University Press, 44–63[20][Volume III Total: 616 pp][Whole Collection = 92 articles = 2,019 pp]