Overcome Market Failures Research Articles

Impact of competitive electricity market on renewable generation technology choice and policies in the United States

Market objectives based on private value judgments will conflict with social policy objectives toward environmental quality in an emerging restructured electricity industry. This might affect the choice of renewables in the future generation mix. The US electricity industry's long-range capacity planning and operations is simulated for alternative market paradigms to study this impact. The analysis indicates that the share of renewable energy generation sources would decrease and emissions would increase considerably in a more competitive industry, with greater impact occurring in a monopoly market. Alternative environmental policy options can overcome market failures and help achieve appropriate levels of renewable generation. An evaluation of these policies indicate their varying cost-effectiveness, with higher levels of intervention necessary if market power exists.

Paradigms of development: A Rejoinder

The comments by Tsai illustrate some important points in the industrial policy debate, though they also reflect a misconception of the purposes of my paper. My rejoinder describes briefly the ‘revisionist’ case, noting that it provides grounds for careful government policies to overcome market failures and not for wholesale, inefficient intervention. It discusses why Tsai's critique of my interpretation of the Asian Tigers is misplaced, and goes on to argue that the ‘revisionist’ case does not underestimate the costs of government failure. It does, however, hold that selective interventions are feasible in certain circumstances, and that other developing country governments can leant from the East Asian experience.

Fundamental Standards and Time Consistency

Recent literature showed that government intervention is important to overcome market failures in the choice of standards. This paper shows that even benevolent and well-informed governments may be unable to overcome such market failures if fundamental standards are concerned. Costs and benefits of changes in fundamental standards are asymmetrically distributed over generations. Intergenerational coordination aimed at changing a current standard will fail because of a time consistency problem. With a simple model and several examples from the history of conventions, the authors discuss the conditions that might help overcome the time inconsistency in standard changing policies. Copyright 1993 by WWZ and Helbing & Lichtenhahn Verlag AG

The new political economy and policy reform

AbstractEconomists involved in offering policy advice to developing countries have often expressed frustration at the extent to which political factors within developing countries have thwarted the implementation of effective economic reform. While the focus of economic policy in the first few decades after World War II was on overcoming market failures, since the 1970s the focus has been on overcoming government failures. This paper examines how politics interacts with economic policy, in particular to consider if the new political economy can help us to achieve the political reform that seems essential if economic reform programmes are to be effective. The conclusion is that economic advice, and advisers, must understand the political environment within which policies will be implemented.

What is to be done about private services?

This article considers the case for public intervention to overcome market failure in the private services sector. It contrasts the performance of consumer services and producer services in the UK over the past couple of decades and considers possible reasons for the disparity. An explanation is offered which focuses on the difficulty of quality monitoring in consumer services where the number of firms supplying some services is likely to be large. Paradoxically, it is argued, the interests of the consumer may be better served by a market structure of larger firms which can brand their quality. Evidence is provided from a NEDO/Gallup Survey that there is untapped potential for higher quality output in this area. A policy response is suggested.