Market failure

The Theory of Market Failure explores how markets respond, both in theory and in practice, to public-goods and externality problems. Most of the articles in this anthology find that markets often meet the demand for public goods in a variety of cases where existing theory would lead one to expect market failure. Moreover, upon reflection, existing theory reveals itself to be in need of supplementation by a more realistic picture of how flexible markets (and evolving systems of property rights) respond to the demand for public goods and for the means of internalizing externalities.