Government Failure versus Market Failure: Microeconomics Policy Research and Government Performance

Government Failure versus Market Failure: Microeconomics Policy Research and Government Performance

by Clifford Winston
     
 

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When should government intervene in market activity and when is it best to let market forces take their natural course? How does the existing empirical evidence about government performance guide our answers to these questions? In this clear, concise book, Clifford Winston offers his innovative analysis—shaped by thirty years of evidence—to assess the

Overview

When should government intervene in market activity and when is it best to let market forces take their natural course? How does the existing empirical evidence about government performance guide our answers to these questions? In this clear, concise book, Clifford Winston offers his innovative analysis—shaped by thirty years of evidence—to assess the efficacy of government interventions. Markets fail when it is possible to make one person better off without making someone else worse off, thus indicating inefficiency. Governments fail when an intervention is unwarranted because markets are performing well or when the intervention fails to correct a market problem efficiently. Winston concludes from existing research that the cost of government failure may actually be considerably greater than the cost of market failure: "My search of the evidence is not limited to policy failures. I will report success stories, but few of them emerged from my search." The prevalence of market failure is due to a lack of conviction in favor of markets, the inflexibility of intervening government agencies, and political forces that enable certain interest groups to benefit at the expense of society as a whole. Winston suggests that government policy can be improved by making greater use of market-oriented solutions that have already produced benefits in certain situations.

Editorial Reviews

"This authoritative and readable monograph provides much-needed balance in the implicit debate between those who hold that the public interest requires extensive government economic intervention and the position that free markets automatically solve all problems. Legislators and economists have focused on needs for intervention, but Winston shows that it sometimes does more harm than good, and its favored methods can be fonts of inefficiency."
William J. Baumol, Berkley Center for Entrepreneurial Studies, NYU

Product Details

ISBN-13:
9780815793915
Publisher:
Brookings Institution Press
Publication date:
04/01/2007
Sold by:
Barnes & Noble
Format:
NOOK Book
Pages:
130
File size:
636 KB

Meet the Author

Clifford Winston is a senior fellow in Economic Studies at the Brookings Institution. Among his previous books are Deregulation of Network Industries: What's Next? coedited with Sam Peltzman (AEI-Brookings, 2000), and Alternate Route: Toward Efficient Urban Transportation, cowritten with Chad Shirley (Brookings, 1998).

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