Market Failure Research Articles

Why are enterprises willing to assume social responsibility? Answers from the perspective of innovation

Previous studies have examined the innovation effect of corporate social responsibility (CSR) by measuring R&D investment or patent output, and there are still different opinions. Using the data of Chinese listed companies, we analyse the influence of CSR on innovation and its mechanism. We find that the active fulfillment of CSR is beneficial to the improvement of the scale and quality of innovation. The mechanism test shows that undertaking more CSR enables enterprises to obtain more financial subsidies, which promotes the improvement of innovation scale and quality. In addition, media attention reinforces the innovative effect of CSR. Heterogeneity research shows that for non-state-owned enterprises (non-SOEs) and enterprises located in areas with imperfect market mechanisms, actively assuming CSR is conducive to improving innovation performance. However, for SOEs and enterprises located in areas with mature market mechanisms, the innovative effect of CSR is not significant.

TINJAUAN IMPLEMENTASI TEORI PERENCANAAN DALAM PENYUSUNAN DOKUMEN STRATEGI SANITASI KABUPATEN BENER MERIAH

The Regency Sanitation Strategy (RSS) document represents the government's initiative to address the consequences of market failure resulting from insufficient sanitation services, that lead to environmental pollution and a decline in public health. This failure has hindered the attainment of the universal access target (100-0-100), characterized by shortcomings in environmental quality, health, and community welfare in Bener Meriah Regency. This study aims to assess the application of planning theory in formulating RSS documents in Bener Meriah Regency. The research employed methods such as document review, interviews, stakeholder mapping, and qualitative descriptive analysis of interview findings. The outcomes include identifying stakeholders, planning approaches, the role of planners, and uncovering weaknesses and ethical issues in the planning process. Conclusions drawn from the discussion are: 1) Six key actors are involved in preparing the RSS document; 2) Various approaches, including mixed scanning, comprehensive rationale, advocacy planning, and collaborative planning, are employed in the RSS preparation process in Bener Meriah; 3) All planning roles play a part in the RSS preparation process; and 4) Weaknesses in the document preparation process encompass inadequate data quality, unrealistic aspects of funding and human resources, and limited engagement of external stakeholders.

Don’t Call It a Failure: Systemic Risk Governance for Complex Financial Systems

The probability that an event will avalanche into an impairment of essential services constitutes a “systemic risk.” Owing to the inherent complexities of modern societies, the outbreak of a novel disease or the failure of a financial institution can rapidly escalate into an impact significantly larger than the initial event. Through the lens of complex system theory, this article draws a parallel between financial crises and disasters to contend that the regulatory framework for financial systemic risk is unequipped to address its fundamental dynamics. Epitomized by the market failure rationale, financial regulation is premised on a reductionist view that purports both systemic risk and law as external to the actions of market participants. Conversely, this article advances a twofold conceptual framework. First, it shows that systemic risk emerges from the same complex dynamics that generate the financial system. Second, it understands law as an agent of complexity, thus contributing to the emergence of finance and its inherent instability. Normatively, this conceptual framework reveals the limits of current regulatory approaches and constructs a holistic risk governance framework that is akin to the one adopted to govern disaster risks.

Planning the future of oral health care workforce: Moving beyond demographic change.

The adoption of Universal Health Coverage for oral health care will not be sufficient to ensure that health care resources are accessible in accordance with needs for care. Government intervention in planning and allocating resources will be required to replace traditional market forces if market failure is not to be replaced by government failure. In this paper we explore the limitations of current 'fixed in time' approaches to planning the oral health care workforce and present an enhanced dynamic model for workforce planning that responds directly to changes in population, evidence-based best practice and new models of care.

Who is responsible for fixing the food system? A framing analysis of media reactions to the UK's National Food Strategy

PurposeHigh levels of child obesity alongside rising stunting and the absence of a coherent food policy have deemed UK’s food system to be broken. The National Food Strategy (NFS) was debated intensely in media, with discussions on how and who should fix the food system.Design/methodology/approachUsing a mixed methods approach, the authors conduct framing analysis on traditional media and sentiment analysis of twitter reactions to the NFS to identify frames used to shape food system policy interventions.FindingsThe study finds evidence that the media coverage of the NFS often utilised the tropes of “culture wars” shaping the debate of who is responsible to fix the food system – the government, the public or the industry. NFS recommendations were portrayed as issues of free choice to shift the debate away from government action correcting for market failure. In contrast, the industry was showcased as equipped to intervene on its own accord. Dietary recommendations made by the NFS were depicted as hurting the poor, painting a picture of helplessness and loss of control, while their voices were omitted and not represented in traditional media.Social implicationsBritish media’s alignment with free market economic thinking has implications for food systems reform, as it deters the government from acting and relies on the invisible hand of the market to fix the system. Media firms should move beyond tropes of culture wars to discuss interventions that reform the structural causes of the UK’s broken food systems.Originality/valueAs traditional media coverage struggles to capture the diversity of public perception; the authors supplement framing analysis with sentiment analysis of Twitter data. To the best of our knowledge, no such media (and social media) analysis of the NFS has been conducted. The paper is also original as it extends our understanding of how media alignment with free market economic thinking has implications for food systems reform, as it deters the government from acting and relies on the invisible hand of the market to fix the system.

Free and Open Source Software - and Other Market Failures

Open source was not so much the goal itself as a means to an end, which is freedom: freedom to fix broken things, freedom from people who thought they could clutch the source code tightly and wield our ignorance of it as a weapon to force us all to pay for and run Windows Vista. But the FOSS movement has won what it wanted, and no matter how much oldsters dream about their glorious days as young revolutionaries, it is not coming back, because the frustrations and anger of IT in 2024 are entirely different from those of 1991.

Analysis of Industrial Sector Competitiveness of Pakistan: An Application of Panzar-Rosse (PR-H) Statistic

This study utilizes the Panzar-Rosse (1978) PR-H Statistics framework to examine the competitiveness of Pakistan's industrial sector. Leveraging data from the Pakistan Stock Exchange (PSX) covering the period from 2007 to 2020 and focusing on insights from the 200 largest listed companies, our study sheds light on the complex market dynamics and competitive forces at play in the sector. By applying the Panzar-Rosse PH Statistic, we aim to demonstrate the presence of a competitive market structure that helps mitigate monopolistic tendencies. Our analysis, while managing endogeneity and employing the Generalized Method of Moments, reveals that the industrial sector in Pakistan is characterized by significant market dynamics that influence business behavior and performance. Despite this, the results of the PR-H Statistics suggest a relatively competitive market environment prevailing in Pakistan's industrial sector. However, there are indications of non-competitive behaviors attributed to weak institutional quality and the overall economic conditions of the country. Additionally, tendencies of weak and imperfect market structures are prevalent, compounded by undocumented and informal economic activities. Through this investigation, we aim to deepen understanding of the competitive landscape in Pakistan's industrial sector and its implications for industrial agents. By highlighting the challenges posed by non-competitive behaviors and weak market structures, our study offers valuable insights into the broader economic ecosystem of Pakistan.

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.

Policy Responses To Fake News On Social Media Platforms: A Law And Economics Analysis

Abstract Fake News is one of the major techno-policy challenges faced by modern societies. As popular discourse shifts to social media platforms, Fake News on the internet has increased drastically, generating significant costs for society. Consequently, there is a regulatory movement across the globe to mitigate fake news on these platforms. A law and economics analysis offers valuable insights towards devising an appropriate regulatory approach to tackling this issue. In economic terms, Fake News can be conceptualized as a negative externality, while Fact-Checking and Content Moderation Services may be defined as public goods. There exists a misplaced individual incentive to create fake news on social media platforms. A clear case of market failure and thus a need for state intervention can be made out. While direct state regulation of platforms is the preferred approach by regulators for mitigating fake news, this paper cautions against over-reliance on such a ‘negative state’ regime, due to censorship risks and enforcement costs. This paper recommends adoption of a multi-pronged strategy, including a statutory Pigouvian tax to internalize social costs of fake news on social media platforms within the market, by channelling resources towards promoting positive state measures to mitigate the broader effects of fake news on these platforms. This paper’s analysis is largely located in the Indian context, with references to other jurisdictions.

Estimating Equilibrium in Health Insurance Exchanges: Price Competition and Subsidy Design under the ACA

Abstract Regulations to design private yet publicly sponsored health insurance markets are increasingly adopted in many OECD countries. Here I combine data and economic theory to analyse the interaction between insurers’ competition and the design of premium subsidies in determining equilibrium outcomes. My empirical model includes adverse selection, rich heterogeneity in preferences for vertically and horizontally differentiated plans and accommodates alternative assumptions on pricing conduct. In the context of the Affordable Care Act in the U.S., I estimate the joint distribution of preferences and expected cost using Californian administrative records on 3.4 million plan choices between 2014 and 2017, combined with plan and survey data on medical claims. An empirical horse race between conduct assumptions favours oligopoly pricing over perfect competition. Considering alternative subsidy designs shows that, in equilibrium, shifting subsidy generosity toward the “young invincibles” would lower premiums for all enrolees while increasing enrolment and profits.

A multiagent collaborative development strategy for environmental pollution liability insurance based on an evolutionary game

AbstractTo improve the problem of environmental pollution liability insurance, this paper constructs an evolutionary game model based on the government, insurance companies, and polluting enterprises. The findings indicate that in an imperfect market, penalty and subsidy mechanisms boost insurance rates. Reinsurance facilitates insurer underwriting, prompting gradual government withdrawal. Effective pricing mechanisms by insurance companies enhance environmental liability insurance operations amid evolving market mechanisms, offering theoretical guidance for addressing challenges in implementing such insurance.

Contract Law When the Poor Pay More

Abstract Taking inequality as a key challenge of our time, this article aims to highlight consumer markets, and their underpinning legal ground rules, as important contributors to inequitable wealth distributions. It illustrates how product design, as manifested in contractual terms, can allow firms to evade competition and divert resources upwards along society’s wealth distribution curve. It then highlights the contestable legality of certain pricing practices, such as ‘contingent charges’, and the challenge they pose to fundamental principles of contract law. An in-depth view of the 2015 case of Beavis v ParkingEye argues that the UK Supreme Court has validated contingent pricing models in a manner unsupported by traditional contractual reasoning and unjustified by contemporary market failure analysis. The article asks contract law to confront the reality that it shapes market distributions in economically and politically significant ways, and appeals for greater scrutiny of the contribution of contract law adjudication to inequality.

Applying resource-based theory to social value creation: A conceptual model of contributive advantage

ABSTRACT Evaluating social impact and social performance offers an ongoing challenge for entrepreneurs due to the substantial complexity involved in analyzing and responding to nonpecuniary firm-, market-, and industry-level factors in the venture creation process. These difficulties are amplified by a lack of clear, reliable, and accessible social performance referents, and are particularly salient for new ventures attempting to solve issues stemming from market, government, or contract failures. Drawing from the foundational tenets of resource-based theory, we explore how ventures currently assess social impact and integrate research on competitive advantage to develop a conceptual model of social value creation strategy. We introduce two concepts to the literature—contributive advantage, defined as the ability of a firm to create more social value than the average performance of the referent competitor, and social rent, which we define as potential returns to a social factor in excess of opportunity costs—and explore the implications for research and practice.

Substantiation of Estimation Methods of Technogenic Noise Impact in Cadastral Value Determination of Land Plots

This article presents a substantiation of methods for assessing the impact of anthropogenic noise pollution for land taxation. Statistical analyses have been carried out in order to establish the dependence of the market value of land plots for residential development in St. Petersburg on noise pollution caused by transport infrastructure facilities. The obtained data allowed us to conclude that in the modern conditions of the imperfect market, the considered factor is externalized. When finding the dependence, it can be included in the economic–mathematical model of cadastral value determination as an internal factor of the market, thus ensuring the principle of fairness of taxation. The lack of market reaction dictates the need to internalize negative environmental externalities through state regulation of land redistribution or redistribution of the tax burden between land rightholders and rightholders of objects that create noise.

An improved dynamic game analysis of farmers, enterprises and rural collective economic organizations based on idle land reuse policy

Land use is a crucial symbol of sustainable development. Rural homestead idleness is problem that is caused by market failure and related to the national economy and people's livelihood. (1) Background: Developing countries should use idle land to develop their economies. The government has introduced various land policies for the reuse of idle residential land to improve the land utilization rate. (2) Methods: This paper investigates players' behavior in reusing rural homesteads based on an improved dynamic game model. An improved tripartite evolutionary game model is developed by introducing principal-agent theory, which is the major contributor to behavioral investigation. MATLAB2022a is used to simulate the analysis to propose countermeasures and suggestions for optimizing homestead reuse. (3) Results: In this paper, it was found that disputes among participants about the sharing of reuse costs and the distribution of potential benefits constituted a potent system of explanatory coordinates that effectively revealed the hidden logic of homestead reuse. The government can strengthen incentives by providing dynamic subsidies linked with individual behavior. (4) Conclusions: Regardless of the initial probability, players will jointly reuse homesteads in the end. Local governments and rural collective economic organizations play an important role in reusing homesteads, so the carrot-and-stick approach supervised by local government is the key to maintaining the stability of cooperation. Moreover, under the concept of sustainable development, governments of all countries actively release the policy of reusing idle land to promote the utilization of resources.

Earnings management using classification shifting of revenues: evidence from Chinese-listed firms

PurposeThis study aims to investigate earnings management practice of classification shifting of revenues in Chinese-listed firms.Design/methodology/approachThe study employs a dataset of 2,920 A-listed firms from Chinese stock exchanges of Shanghai and Shenzhen for the period of 2003–2019. We apply both univariate and panel regression analysis by using fixed effect estimation with robust standard errors.FindingsOur findings reveal that firms misclassify revenues by taking advantage of the flexibility provided by applicable financial reporting standards. The empirical evidence obtained through regression analysis suggest that managers reclassify non-operating revenues as operating revenue to alter the economic reality while seeking the advantage of financial reports users’ vulnerability for valuing the upper half of income statement items more as compared to lower part. The results further indicate that international financial reporting standards adoption inhibits the earnings management practices using classification shifting of revenues. It is also concluded that firms, which are suffering losses or having low growth, are more persistently involved in misclassification of revenues.Originality/valueThe study is unique from the point of view that it investigates earnings management from the prospective of revenue’s classification in an emerging market characterized by various market imperfections such as lower investor protection and higher information asymmetry.

Preparation of photoresponsive lanthanide aluminate-immobilized nanofibers from recycled bioplastic via solution blowing spinning for optical authentication labeling

Photochromism is an intriguing technology to enhance the authentication of various commercial materials. In order to produce a transparent authentication film, it is also significant to improve the engineering process of anti-counterfeiting materials. In contrast to electrospinning, the solution blowing spinning (SBS) technique has been recently developed to produce nanofibers at low-cost and high yield with no need to apply high voltage. It has been essential to reduce the toxic pollution caused by plastic waste. Herein, we develop a photoluminescent nanofibrous membrane from recycled polylactic acid (PLA) waste and nanoparticles of strontium aluminate (NSA) by using the simple SBS technique. We investigated the potential use of the NSA@PLA composite nanofibers for photochromic anti-counterfeiting driven by ultraviolet light. Encapsulating the nanoparticle form of the strontium aluminate phosphor into polylactic acid nanofibers is necessary to ensure the transparent characteristic of the nanofibrous film. The film transparency can be further improved by the efficient dispersion of NSA without aggregation in the polylactic acid solution. Nanofibrous membranes with varying emission characteristics were produced by varying the NSA ratio. Both of X-ray diffraction (XRD) and Transmission electron microscopy (TEM) demonstrated the morphology of NSA to show diameters of 5–12 nm. The morphologies of the nanofibrous membranes were examined using various analytical methods, including energy-dispersive X-ray spectroscopy (EDX), X-ray fluorescence spectroscopy (XRF) and scanning electron microscopy (SEM). The mechanical characteristics and optical luminescence were also examined. SEM analysis of the NSA@PLA nanofibers showed diameters of 100–220 nm. The NSA@PLA nanofibrous membranes exhibited an emission peak at 518 nm upon excitation at 365 nm. The contact angles of the NSA@PLA nanofibrous membranes increased from 138.2° to 144.5° as the NSA concentration was increased, indicating an improved superhydrophobicity. Exposure to ultraviolet light caused the transparent nanofibers to undergo a rapid and strongly reversible photochromism to greenish emission. The present study can be reported as an easy and efficient approach to create anti-counterfeiting materials that offer a perfect market with social and financial profits.

Do government subsidies promote enterprise green innovation? Evidence from listed companies in China

ABSTRACT Government subsidies are essential in guiding enterprises’ transformation and development. In the face of the green transformation dilemma for businesses during the transition from old to new growth drivers, it is crucial to investigate whether government subsidies can further enhance their effectiveness. We utilize a panel dataset of Chinese listed companies from 2007 to 2021 to explore the relationship between government subsidies and green innovation (GINN), with a specific focus on the moderating effect of marketization. We find that government subsidies not only significantly promote substantive green innovation (UGINN) and strategic green innovation (TGINN) but also improve business performance. The moderating effect model demonstrates the presence of market failure in GINN. We also show that marketization index (MI), environmental information disclosure (EDI), highly polluting industries (HPI), and manufacturing (MF) have significant moderating effects. The mechanism analysis further elucidates that government subsidies promote GINN by encouraging increased R&D investments. However, it is essential to note that these subsidies can also lead to inefficient investments by enterprises, resulting in a waste of resources. We offer significant enlightenment for understanding the government’s role in promoting GINN in enterprises and improving relevant subsidy policies.

Credible and comprehensive? Comparing policy mixes for Local Energy Systems in England, Scotland and Wales

Integrated Local Energy Systems (LES) are being pursued internationally as a component of net zero, with additional benefits to regions and communities. This paper develops and tests a policy mixes approach to examine differential development of LES policies over 11 years in the three political jurisdictions (England, Scotland and Wales) which comprise Great Britain's (GB) single energy market. The analysis contributes to knowledge about the strengths and weaknesses of the policy mixes concept as an analytical tool for exploring divergence in devolved governments. It also considers the likely effectiveness of these policy mixes for stimulating LES developments in practice. Analysis of over 50 policy strategies and 105 policy instruments is used to evaluate the credibility of the policy mixes, ie. whether these are believable and reliable, and their comprehensiveness, ie. whether all market, system and institutional failures are addressed. The policy mix in England exhibits fluctuation and short-termism, making it the least credible. Strategies in Scotland and Wales demonstrate a more credible and ambitious policy mix for LES, including long term policies and new instruments added over time. However, limited political powers mean that the policy mixes in Scotland and Wales are less comprehensive than in England, making the realisation of LES uncertain. Further, none of the policies are designed to challenge systemic interdependencies of GB's liberalised and largely centralised energy system. This ultimately limits capacity to deliver LES and highlights the need for policy development, in GB and elsewhere, to encompass regulatory and institutional innovation to realise LES benefits.

Nash equilibria in models of fiscal competition with unemployment

AbstractThis study examines two different fiscal competition games under labor market imperfections. Given that capital moves across regions and affects regional employment, governments must choose the expenditure level and tax rate on such mobile capital by accounting for the effects of fiscal variables on both capital and labor. Therefore, governments may play these games with either the tax rates on mobile capital or with public expenditures. The presence/absence of absentee ownership of capital and employment externalities are significant factors that characterize two distinct Nash equilibria, one that occurs with tax competition and the other with expenditure competition. Contrary to the existing literature, tax rates under tax competition are likely to be lower than those under expenditure competition owing to employment externalities. In some cases, governments prefer to choose government expenditure as their strategic variable rather than the tax rate. The presence of employment externalities motivates governments to use such expenditure as the variable through which it may strengthen strategic effects.