Correct Market Failures Research Articles

On the economic growth and environmental quality nexus in India

ABSTRACT This study extends prior research and takes a robust account of the effects of economic growth on environmental quality in India, using several single-equation and system estimators and considering multiple structural breaks over ‘long’ as well as ‘short’ time periods. The long-run model is estimated on annual data for the period 1951–52 to 2015–2016. The results provide robust support for the positive and significant effects of gross domestic product and financial development and for the negative effects of trade openness and domestic investment on carbon dioxide emissions. The presence of structural breaks challenges the validity of smooth and continuous relationship between income and emissions postulated in previous research. Policy intervention, in terms of the imposition of Pigouvian tax, allocation of carbon quotas and promotion of carbon ‘cap-and-tax’ and/or ‘cap-and-trade’ systems, is needed to correct market failure, to cover the external cost of pollution and to curtail the emission of carbon. It is worth subsidizing alternative sources of energy, adopting carbon-efficient technologies and switching to carbon-neutral substitutes.

Does Pricing Carbon Mitigate Climate Change? Firm-Level Evidence from the European Union Emissions Trading System

Abstract In theory, market-based regulatory instruments correct market failures at least cost. However, evidence on their efficacy remains scarce. Using administrative data, we estimate that, on average, the European Union Emissions Trading System (EU ETS)—the world’s first and largest market-based climate policy—induced regulated manufacturing firms to reduce carbon dioxide emissions by 14–16% with no detectable contractions in economic activity. We find no evidence of outsourcing to unregulated firms or markets; instead, firms made targeted investments, reducing the emissions intensity of production. These results indicate that the EU ETS induced global emissions reductions, a necessary and sufficient condition for mitigating climate change. We show that the absence of any negative economic effects can be rationalized in a model where pricing the externality induces firms to make fixed-cost investments in energy-saving capital that reduce marginal variable costs.

Industrial policy for a circular industrial transition in Sweden: An exploratory analysis

Currently, both the US and the EU are pursuing industrial policies to support climate mitigation objectives. The climate transition will require increased use of material resources, but the envisioned industrial policies do not sufficiently address resource use, despite the current unsustainable global resource-use trajectory. The lack of industrial policy in this field is therefore relevant and timely to address. This exploratory contribution aims to gain an understanding on how an industrial policy for Circular Economy (CE) transition in Sweden could be designed. The methods employed are literature reviews and interviews with 18 senior experts. The research finds that a Swedish industrial policy focusing on the CE transition is needed, together with larger public investments in CE-related technologies. Few existing policy instruments functioning as industrial policy for CE are identified, but many additional instruments could potentially serve this objective. The interviews provide insights into the specific policy needs, the factors determining policy-design, and the choice of sectors and value chains for policies to target. A relevant policy mix includes policy instruments such as green tax shifting, differentiated Value Added Tax, Circular Public Procurement, funding schemes, but also an improved institutional framework. Policy criteria should be based on environmental impact, but also on potential competitive advantages, and close alignment with European Union policies. The study concludes that a policy mix combining new and expanded industrial policy instruments, focusing on correcting market failures, market creation, and capacity-building, can support a circular industrial transition.

Free secondary education policy and education attainment

This paper investigates the impact of Ghana’s Universal fee-free secondary education policy (FreeSHS) on educational attainment (completion rates). The policy was introduced in the school year 2017/2018, allowing every child to pursue secondary education irrespective of their background. We emphasize the educational outcomes of schoolgirls as they are shown to be at a greater disadvantage when accessing higher education in Ghana. Given the universality of the policy, we estimate a Difference-in-Differences model using variations in the treatment intensity across districts. The treatment and comparison groups are thus defined based on the differences in the uptake rate (changes in the uptake of education due to a price change). The paper draws from a comprehensive panel dataset capturing the demand and supply factors to education across 261 districts in Ghana. The empirical findings suggest that schoolgirls’ completion rate increased by 14 percentage points in high uptake districts, whereas the reform impact is estimated at 14.9 percentage points overall (for boys and girls). In effect, the absorption of education costs by the state serves as a critical incentive for cost-constrained households and an efficient measure for correcting market failures related to access and completion of secondary education for girls.

Governing the economics of the common good: from correcting market failures to shaping collective goals

ABSTRACT To meet today’s grand challenges, economics requires an understanding of how common objectives may be collaboratively set and met. Tied to the assumption that the state can, at best, fix market failures and is always at risk of “capture”, economic theory has been unable to offer such a framework. To move beyond such limiting assumptions, the article provides a renewed conception of the common good, going beyond the classic public good and commons approach, as a way of steering and shaping (rather than just fixing) the economy towards collective goals.

Sustainability and Net Zero climate agreements – a transatlantic antitrust perspective

The climate crisis requires a transition to a Net Zero economy. Such a transition is possible only through concerted public and private action. While a number of financial institutions and insurance companies had agreed to align their activities with Net Zero targets, reconsidering support for new coal and fossil fuel projects, these initiatives have come under attack from political groups in the US, who have labelled such agreements ‘collective boycotts’. Such accusations feed a collective action problem, and thus hinder private sector cooperation. This article discusses the background to Net Zero Agreements, and the recent antitrust criticisms, under US, EU and UK antitrust law and precedent. Net Zero Agreements can alleviate market failures, resolve collective action problems, and improve consumer welfare by lowering the potentially huge costs to consumers of an unmitigated climate crisis. Under a rule of reason, antitrust authorities and courts in the US, EU, and UK can and should give room for private sector cooperation between companies pursuing an effective transition to a clean economy, where these agreements correct market failures and resolve collective action problems.

A study on the regulation of digital platforms and the need or excess in the employment relationship

The purpose of this article is to identify how the principles of labor law and the requirements of the employment relationship were applied to the case of the United Kingdom Court in which it recognized an employment relationship for Uber drivers and in a diametrically opposed decision of an Interlocutory Appeal in an appeal filed by the claimant, the 4th panel of the TST recognized the impossibility of a link between the driver and technological platforms. Thus, this article intends to raise the aspirations of Brazilian society in not wanting to import foreign laws anymore, without due analysis by the competent regulatory bodies, running the risk of these regulatory decisions not bringing any benefit to Brazilian society. The developed research adopts a basic review method on Digital Platforms, Uberization and Employment Relationship Requirements, where the procedure used was bibliographical research. As a result, we conclude that the objectives of this research are achieved by demonstrating that innovation has removed 85% of the world's population from extreme poverty in 200 years, which provokes reflections in the reader public on excessive regulation of innovation, if in fact there is a need more regulation, as we have enough tools to correct market failures.

보조금에 대한 분석 및 정책적 시사점

This paper analyzes the motivation for subsidies and their economic effects through literature research, and then examines policy implications for subsidy analysis. International cooperation on subsidies should be made to correct market failures and provide essential public services while reducing the negative externalities of subsidies. To achieve this goal, governments and international organizations need to share information on subsidies, provide economic analysis of the effects of various subsidies and suggest alternatives, and strengthen global standards and legal measures against subsidies that distort overseas markets and cause the climate crisis. Broader cooperation between countries on subsidies should be made in the direction of enhancing transparency, openness and predictability of international trade.

Analysis of Real Estate Taxation in the European Union’s Countries

The topicality and purpose of the topic lies in the fact that property taxation was one of the sources that generated important public funds necessary for the existence of states and contributed to their development. The level of originality of this study derives from the analysis of property taxes for the reference period and is presented in relation to other important macroeconomic indicators, while presenting the main real estate valuation systems used by EU states. Moreover, fiscal policies have made a significant contribution to correcting market failures. These were due to several factors, including the extreme exegesis of banks in lending between 2006 and 2018 which amplified the effects of the economic crisis that began in 2008, culminating in 2009 with a major economic recession; and in the EU it has translated into a significant decrease in GDP and tax revenue by 2.3% over the previous year. Consequently, a tax system designed in compliance with key principles, such as the neutrality of fiscal measures, certainty, fairness or the effectiveness of taxation, could help to achieve economic balance. And in this context amplified by changes in real estate, fiscal policy needs to be flexible enough to mitigate the future effects of national and international crises. In terms of the limitations of this study, we note the discrepancy between the data provided by the OECD and Eurostat, most likely due to the different calculation methodology, but which does not affect the conclusion that can be drawn from their interpretation. The interpretation of the results highlights the need for an individual analysis of property tax in each EU Member State.

A critical appraisal of East African Community Law governing economic subsidies and their impact on competition

This article examines the effectiveness of the East African Community legal framework governing economic subsidies and their impact on competition in controlling the granting of such subsidies by Governments of the Partner States. It employs qualitative techniques involving documentary review of legal instruments, case law and scholarly writings, as well as interviews with selected officials in relevant portfolios in Kenya and Tanzania. The research concludes that the legal standards for the regulation of economic subsidies facilitate the effective limitation of the intervention in the market by Governments of the Partner States. The standards may, accordingly, be applied to limit their intervention in the market, using economic subsidies only to the extent strictly necessary to correct market failure. It also establishes, in contrast, that the regulatory institutions are unsuitable, with reference to their power, to limit the intervention in the market by the said Governments. Accordingly, it, recommends that the institutional framework of the Community be reviewed so as to safeguard the functional autonomy of the regulatory institutions and harmonise their mandates.

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Resisting IP Overexpansion: The Case of Trade Secret Protection of Non-Personal Data

This article analyses how intellectual property rights (IPRs) affect access to non-personal data (NPD). In so doing, it homes in on a quasi-IPR, trade secrecy, and shows how applying it to NPD can lead to the overexpansion of IP protection. The risks of overprotection relate to the perpetuity of trade secret protection and the predominant interventions to correct market failure that scholars advance in order to restrict IPRs and quasi-IPRs. The paper then goes one step further to survey regulatory and interpretive solutions that could help to mitigate the risks of overprotection and make room for creating data access rules. Specifically, it explores two principles deriving from “physical” property theory that can be rejigged for the purpose: the numerus clausus of IPRs and the social function of intellectual property. Conceptualised in a novel fashion, these could steer legislatures and courts towards a restrictive understanding of IP forms and contain the propertisation of new intangibles, such as NPD aggregations.

Impact of Regulatory Changes on Innovations in the Medical Device Industry Comment on "Clinical Decision Support and New Regulatory Frameworks for Medical Devices: Are We Ready for It? - A Viewpoint Paper".

Economic regulation is an instrument of the state or other institutions to correct market failures, rectify the business environment, or protect consumers. Regulation can be a major driver of innovation, and it has proven to be so in the past. On the other hand, there are also documented cases of ineffective regulation due to information delays or shortcomings in government decision-making. The complexity of the impact of regulatory changes on innovation can currently be observed in the medical device market in Europe. Regulation (EU) 2017/745 whose main idea is to ensure greater safety and health protection for consumers, is a challenge for originator, manufacturer, mostly small and medium-sized enterprises. The regulation is associated with an increase in the cost of developing and maintaining the product on the market. We can now gradually begin to analyze whether it can be ranked among those that have become drivers of innovation.

Mandatory Schooling of Girls Improved Their Children's Health: Evidence from Turkey's 1997 Education Reform

AbstractThis study examines the impact of mandatory maternal education on child health in Turkey, where a non‐trivial fraction of families restricted their daughters’ schooling due to social and cultural barriers. The analysis employs two large data sets and exploits a quasi‐experiment involving an education reform that increased compulsory schooling. Results show that an increase in mother's schooling improves child health at birth (as measured by factors such as low birth weight and premature birth) and lowers child mortality. The current study on the intergenerational benefits of compulsory schooling arguably provides the strongest evidence supporting the argument that mandatory female education has substantial nonpecuniary benefits in terms of the health of the offspring in societies where female education is stigmatized. The implications of this research extend beyond girls’ schooling and suggest that compulsory human capital investments in children can correct market failures when families underinvest in their children because of social or cultural barriers.

State-owned enterprises as a political tool: The case of a Venezuelan oil company

Public companies represent a valuable tool for the state to intervene in the economy by correcting market failures. However, critical positions that advocate its privatization continue to appear since they do not usually have great returns. This study analyzes the effect that political goals have on the efficiency of a state-owned enterprise (SOE) when ownership and management tend to be concentrated in the same actor. Agency theory served as a reference framework, using Petróleos de Venezuela (PDVSA) as a case study during the period 1995–2014. First, the period was divided into four stages differentiated by changes in the SOE volumetric strategy, the exploration strategy, the position regarding foreign capital, and the SOE participation in social development activities. Later, the SOE economic and productive efficiency was analyzed in the stages to identify relevant changes. The results indicate that the interests of the principal and the agent by good management of the SOE increase when the profit is reduced. It is mainly due to the need of the government to benefit from these activities. However, when the company surplus increase, the government tends to intensify its control to obtain additional benefits, especially during electoral events.

A market failures approach to justice in health

It is generally acknowledged that a certain amount of state intervention in health and health care is needed to address the significant market failures in these sectors; however, it is also thought that the primary rationale for state involvement in health must lie elsewhere, for example in an egalitarian commitment to equalizing access to health care for all citizens. This paper argues that a complete theory of justice in health can be derived from a commitment to correcting market failure, or in other words promoting Pareto-efficiency, in the domain of health. This approach can address familiar problems around access to care, as well as problems related to resource allocation and rationing (including resource allocation between generations), the control of health care costs, and the foundations of public health. Egalitarian theories of justice in health cannot make sense of the depth and pervasiveness of state involvement in health and health care; only a theory rooted in the need to correct market failure can.

Office Bullying in the Philippines and the Need for Public Policy

There is an urgent need to solve the problem of workplace bullying in both private and government sectors. Bullying at work creates serious negative consequences to the victims and the organization affecting their productivity. The magnitude of the problem necessitates state intervention to correct market and government failures. This policy paper studies office bullying and the need to legislate to realize efficient and effective allocation of government and private resources. It is guided by the Constitutional mandate that maintenance of peace, harmony, health and safety at work is an inherent duty of the State because of its inherent power to issue orders and command obedience to mitigate its effects. Using Cost Benefit Analysis, Institutional Analysis to policy making, and Rational-Decision making as tools for analysis, crafting and passing upon a statute is the most feasible means to address the problem of workplace bullying. The need to legislate a national policy on workplace bullying is necessary to mitigate its negative consequences both to employees and organizational productivity. Office bullying as a public issue also requires strict monitoring and evaluation of the implementation of similar or related laws may also address the problems cause by the same destructive behaviors but are inadequately explored in many researches.

Correcting market failure? Stalled regeneration and the state subsidy gap

This paper develops the neologism state subsidy gap to underscore the necessity of state intervention in the formation and potential closure of rent gaps. The state subsidy gap is the economic gap that must be bridged by the state to make a currently unviable urban investment scenario potentially profitable for private developers. The pertinence of this conception is particularly apparent in old industrial, relatively impoverished cities where global capital is less likely to dump its surpluses with secure expectation of profitable returns. The issue is exacerbated in economically risky neighbourhoods encompassing fragmented land ownership, poor infrastructure and large-scale areas of urban devalorisation. Such conditions necessitate substantial derisking public intervention if ‘market failure’ is to be addressed—yet success is never guaranteed and is far from universal. It is argued that much closer attention to the stalling, interruption or failure of urban regeneration projects is imperative given the extent of public expenditure and the limited social outcomes arising from attempts to correct market failure. Here, the concept of the state subsidy gap shows its value, shedding light on unjust social outcomes, exposing capitalism’s inherent vulnerabilities, and illustrating the dependence of private capital on public interventions for its reproduction.

Government Policy and Performance of Agricultural Cooperatives: A Case Study in Chitwan District, Nepal

Agricultural cooperatives are producer-owned and controlled organizations to improve farmers’ livelihoods by correcting market failure. They support collective activities where individual incentives are insufficient to produce public goods. The government of Nepal has been investing economic resources in this sector, prioritizing cooperatives as part of a strategy for poverty reduction. This study examines poor farmers’ access to agricultural cooperatives and the impact of membership on farm and total household income, based on a household survey of 572 households and key informant interviews of 37 cooperative managers. The ethnicity of the family and the neighborhood, smallholder land size, distance to an agricultural cooperative, distance to the nearest local market, and distance to a motorable road are key determinants that influence cooperative membership. The analysis of the effects of cooperative membership is based on propensity score matching, controlling for a large array of household and community characteristics. The estimates imply that cooperative membership may significantly affect family net crop income, but the overall effects on total family income are modest. Agricultural cooperatives appear to be focused on financial services such as savings and credit activities but are less concerned with agricultural production, and cooperatives engage in almost no marketing activities.

Food safety and government regulation in rural China

Due to the negative impact of China's food scandal and people's awareness of food safety, consumers and the government are constantly looking for healthier and safer food. This paper finds that rural agricultural products (RAP) have an absolute competitive advantage in public consumption choice. However, after an in-depth investigation, there are many potential safety risks in the RAP. Serious information asymmetry exists in the consumption choices and production processes of RAP. Furthermore, there are many regulatory gaps in RAP. Consequently, it is necessary to strengthen government regulation to correct market failure and current ineffective regulation. Game theory analysis shows that increasing incentives and penalties for large family farms may be an effective regulatory policy. The findings of this paper are beneficial to the formulation of reasonable government regulation policies to ensure the safety of RAP. • The rural agricultural products have absolute competitive advantage in public consumption choice in China. • Serious information asymmetry exists in the consumption choices and production processes of rural agricultural products. • It is necessary to strengthen government regulation to correct market failure and current ineffective regulation. • Game theory analysis shows that increasing incentives and penalties for large family farms may be an effective regulatory policy.