Famous Allegories in Economics: The Myth of Market Failure: The Myth of Market Failure

Author: Daniel S. Posner
Publisher:
Publish Date: 2004-02-01
Features: The Famous Fables of Economics critiques some of the fables we hold dear about market failures. Economists have used these elaborate stories to justify broad government intervention in the economy, including the provision of public goods and services, economic regulation of industries, and antitrust actions against large corporations. Despite the fact that these gaudy and loud fables are fundamentally flawed and inaccurate, their appeal in the fields of economics, law, and management has not diminished—they are still cited countless times in classrooms, textbooks, and academic discussions. The fables examined in this book include the lighthouse, the keyboard, the bees and the orchard, the General Motors merger with Fisher Body, the Freedom and learning curves, predatory pricing, and the tulip mania. This thought-provoking book reveals that many of the economists' favorite fables are nothing more than myths, and it raises fundamental questions about the role of government in society. Whether you are a general reader, a student, an economics professional, or a scholar, you will be able to understand the arguments presented in this book. The articles included in this book demonstrate that the economic analysis of market failures should be based on a systematic study of institutions and transaction costs, rather than relying on unrigorous anecdotes.