What exactly is market failure? And how do we know if something really is in fact, a market failure?
A mystical creature thought to live far of in northern latitudes and feed on lorries roadkill. No one has ever seen it and yet everyone mentions it whenever the laws of nature seem to bend. It is thought to controll all major corporations via text messages. It’s also a 33rd degree Freemason.
Haha thought so (or are you being cynical?).
I suppose that some people see it as a good way to argue why something which isn’t provided for society by the market but should, “therefore we must fix it”.
If there truly was a need for something, wouldn’t a market have already been developed for it?
A market failure is a standard beg-the-question fallacy of interventionists. They look at group of peaceful people and say something isn’t like X. And then because that something isn’t X, it is justified to try to force X.
The ‘perfect competition’ argument is precisely the same. They say that the market isn’t like some theoretical model, and therefore they have the right to force everybody into a monopoly.
They miss the point completely that reality isn’t like those things for a good reason.
Hans Hoppe - Public Goods / Market failure
http://www.vforvoluntary.com/wiki/PublicGoods
A market failure happens when the economy does not follow the mathematical model of a famous keynesian economist.
Thanks for the reply Nielsio.
Could you perhaps elaborate a bit more on this,
When you write, “They say that the market isn’t like some theoretical model” do you mean that they don’t believe that profits will go to zero in a PC market which is why they have the right to force everyone into a monopoly?
I added a link.
No, they don’t look at it dynamically, they look at it statically. They will say: not all producers produce exactly the same thing. Or: not everybody has the exact same knowledge about the products. Things like that. In other words, they assume from the get-go that monopolistic intervention is the default way, and that a deviation is an abomination.
I spotted the link after I submitted my reply, but thanks anyway. I appreciate it.
I think a market failure is supposedly when something can’t be provided by the market but have to be forced to happen.
The relevant question then is is fail to what end…
In this sense only a planned economy can fail.
Market failure is a term for the adverse and unintended consequences of interventionism. Governments blame free markets for problems caused by their programs, then institute new programs to fix the problems created by previous programs. Thus, government grows. For example, mainstream media outlets and government spokesmen blame free markets for the recent financial recession, despite the fact artificially low interest rates can only exist with the gunmen of government to back their enforcement, and that the United States and most other countries are highly hampered market economies.