政府经济学Chapter 4 Market failure.docx

政府经济学Chapter 4 Market failure.docx

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政府经济学Chapter4Marketfailure

Chapter4Marketfailure

Lastchapterconcludedthatmarketsfunctionwell,marketsbringaboutanefficientallocationofresourceswithoutanyneedforcoordinationthroughgovernmentintervention.Forthisconclusion,wemadeseveralassumptionsabouthowmarketswork.Whentheseassumptionsdonothold,ourconclusionthatthemarketequilibriumisefficientmaynolongerbetrue.Inthischapter,letconsiderbrieflythreeofthemostimportantoftheseassumptions.

First,ouranalysisassumedthatmarketsareperfectlycompetitive.Intheworld,however,competitionissometimesfarfromperfect.Insomemarkets,asinglebuyerorseller（orasmallgroupofthem）maybeabletocontrolmarketprices.Thisabilitytoinfluencepricesiscalledmarketpower.Marketpowercancausemarketstobeinefficientbecauseitkeepsthepriceandquantityawayfromtheequilibriumofsupplyanddemand.

Second,ouranalysisassumedthattheoutcomeinamarketmattersonlytothebuyersandsellersinthatmarket.Yet,intheworld,thedecisionsofbuyersandsellerssometimesaffectpeoplewhoarenotparticipantsinthemarketatall.Pollutionistheclassicexampleofamarketoutcomethataffectspeoplenotinthemarket.Suchsideeffects,calledexternalities,causewelfareinamarkettodependonmorethanjustthevaluetothebuyersandthecosttothesellers.Becausebuyersandsellersdonnottakethesesideeffectsintoaccountwhendecidinghowmuchtoconsumeandproduce,theequilibriuminamarketcanbeinefficientfromthestandpointofsocietyasawhole.

Third,allmarketparticipantshavethesameinformationaboutthenatureofthegoodandthecircumstancesunderwhichitistraded.Yet,intheworld,thereisasymmetricinformationbetweenbuyersandsellers.

Ifoneormoreoftheseassumptionsdoesnothold,themarketsystemdoesnotgiverisetoanefficientoutcome（i.e.thefirsttheoremdoesnothold）.Theseinefficientoutcomesarecalledmarketfailure.Theprincipaltypesofmarketfailurearediscussedbelow.

4.1Publicgoods

Inthecaseofpublicgoodsforinstance,themarketfailsbecauseofthepropertieswhichcharacterizeapublicgood:

non-rivalryandnon-excludability.Non-rivalryimpliesthatoneunitofthegoodcanbeconsumedsimultaneouslybyallconsumersandnon-excludabilitymeansthatitisimpossibletopreventconsumersconsumingthegoodwhentheyhavenotpaidforit.

Alighthouseisaclassicexampleofapublicgood.Thelighthousesignalthatwarnsoneshipawayfromadangerousreefwarnsall.Whetherthelighthousewarnsasingleshiporathousand,thecostisthesame.Forthisreason,apublicgoodiscallednon-rival.Inadditiontobeingnon-rival,manypublicgoodsarealsonon-excludable.Agoodisnon-excludableifthereisnopracticalwayofdenyingittopeoplewhowillnotpayforit.Alighthouseisalsonon-excludable,becauseitwouldbedifficultorimpossibleforaprivatefirmtochargeafeetoashipfrothebenefitofseeingthewarningsignalfromthelighthouse.

Asaconsequence,themarketmaysupplytoolittleofthepublicgoodorfailtosupplythegoodcompletely.Becausenon-excludabilitymeansthatthefirmsareunabletosetafeefortheuseofthepublicgoodsthattheyprovide,andhencecanonlycovertheircostsiftheusersmakevoluntarypayment.Thissituationgivesrisetothefreeriderproblemeachuserisconfrontedwiththefollowingchoice:

hecancontributetotheprovisionofthepublicgoodandenjoyitsbenefits,orhecankeephismoneyinhispocketsandenjoyitsbenefitsanyway.Notsurprisingly,peoplefacedwiththischoiceprovetobereluctanttopartwiththeirmoney.Totalcontributionsarerelativelysmall,soonlyasmallquantityofthepublicgoodisultimatelyprovided.Everypersonwouldbebetteroffifeveryonecouldbeforcedtogivealittlemore.Governments,whentheyfinancetheprovisionofpublicgoodsthroughtaxes,arethereforeengaginginasociallybeneficialformofcoercion.

Whiletheunder-provisionofpublicgoodstakesitsmostdramaticformwhenthepublicgoodis“pure”,theprovisionofless-than-purepublicgoodsisalsoproblematic.Ifagoodisnon-rivalrousbutexcludable,aprivateproviderofthatgoodcanonlyremaininbusinessbychargingtheuserapositiveprice.Thispracticeresultsintheexclusionofsomepotentialusers.Theprovider’sinterestsareatoddswiththoseofsociety,becausesociety’swelfareismaximizedbyexcludingnoone.

4.2Externalities

4.2.1Introduction

Anexternalityariseswhenapersonengagesinanactivitythatinfluencesthewell-beingofabystanderandyetneitherpaysnorreceivesandcompensationforthateffect.Or,Anexternalitycanoccurwhenaperson’sutilityisaffectedbyanotherperson’sconsumptionorbyafirm’sproductionactivities.Aswell,anexternalit