Government Failure Versus Market Failure : Microeconomics Policy Research and Government Performance

Written by Clifford Winston (senior fellow in Economic Studies, Brookings Institution), Government Failure Versus Market Failure: Microeconomics Policy Research and Government Peformance examines three decades of empirical evidence in search of the answers to a critical question: When should government intervene in market activity, and when is it better to allow market forces to operate without interference? Chapters discuss such topics as antitrust regulations, policies intended to correct market failures, common Achilles heels of social goals policies, and much more. Drawing heavily upon the accumulated data, Government Failure Versus Market Failure strives to give today's economic policymakers and politicians recommendations for optimal success in future strategies to promote optimal well being both in terms of social and free-market interests. Highly recommended.

A Brookings Institution Press and American Enterprise Institute publicationWhen should government intervene in market activity and when is it best to let market forces take their natural course? How does the existing empirical evidence about government performance guide our answers to these questions? In this clear, concise book, Clifford Winston offers his innovative analysis—shaped by thirty years of evidence—to assess the efficacy of government interventions.Markets fail when it is possible to make one person better off without making someone else worse off, thus indicating inefficiency. Governments fail when an intervention is unwarranted because markets are performing well or when the intervention fails to correct a market problem efficiently. Winston concludes from existing research that the cost of government failure may actually be considerably greater than the cost of market failure: "My search of the evidence is not limited to policy failures. I will report success stories, but few of them emerged from my search." The prevalence of market failure is due to a lack of conviction in favor of markets, the inflexibility of intervening government agencies, and political forces that enable certain interest groups to benefit at the expense of society as a whole. Winston suggests that government policy can be improved by making greater use of market-oriented solutions that have already produced benefits in certain situations.

A Brookings Institution Press and American Enterprise Institute publication When should government intervene in market activity and when is it best to let market forces take their natural course? How does the existing empirical evidence about government performance guide our answers to these questions? In this clear, concise book, Clifford Winston offers his innovative analysis—shaped by thirty years of evidence—to assess the efficacy of government interventions. Markets fail when it is possible to make one person better off without making someone else worse off, thus indicating inefficiency. Governments fail when an intervention is unwarranted because markets are performing well or when the intervention fails to correct a market problem efficiently. Winston concludes from existing research that the cost of government failure may actually be considerably greater than the cost of market failure: "My search of the evidence is not limited to policy failures. I will report success stories, but few of them emerged from my search." The prevalence of market failure is due to a lack of conviction in favor of markets, the inflexibility of intervening government agencies, and political forces that enable certain interest groups to benefit at the expense of society as a whole. Winston suggests that government policy can be improved by making greater use of market-oriented solutions that have already produced benefits in certain situations.

When should government intervene in market activity and when is it best to let market forces take their natural course? How does the existing empirical evidence about government performance guide our answers to these questions? In this clear, concise book, Clifford Winston offers his innovative analysis —shaped by thirty years of evidence —to assess the efficacy of government interventions.

Markets fail when it is possible to make one person better off without making someone else worse off, thus indicating inefficiency. Governments fail when an intervention is unwarranted because markets are performing well or when the intervention fails to correct a market problem efficiently. Winston concludes from existing research that the cost of government failure may actually be considerably greater than the cost of market failure: "My search of the evidence is not limited to policy failures. I will report success stories, but few of them emerged from my search." The prevalence of market failure is due to a lack of conviction in favor of markets, the inflexibility of intervening government agencies, and political forces that enable certain interest groups to benefit at the expense of society as a whole. Winston suggests that government policy can be improved by making greater use of market-oriented solutions that have already produced benefits in certain situations.

When Should Government Intervene In Market Activity? When Is It Best To Let Market Forces Simply Take Their Natural Course? How Does Existing Empirical Evidence About Government Performance Inform Those Decisions? Brookings Economist Clifford Winston Uses These Questions To Frame A Frank Empirical Assessment Of Government Economic Intervention In Government Failure Versus Market Failure: Microeconomics Policy Research And Government Performance.--book Jacket. Introduction -- Methodological Perspective -- Market Power: Antitrust Policy And Economic Regulation -- Social Regulation: Imperfect Information And Externalities -- Public Production -- Policies To Correct Market Failures: Synthesis And Assessment -- Market Failure And Social Goals Policies: Common Failures And Conflicts -- Policy Recommendations Motivated By Policymakers' Learning -- Microeconomics Policy Research And The Policy Community. Clifford Winston. Includes Bibliographical References (p. 109-124) And Index. Cover......Page 1 Title Page......Page 4 Contents......Page 8 Foreword......Page 10 Acknowledgments......Page 12 1. Introduction......Page 14 2. Methodological Perspective......Page 20 3. Market Power: Antitrust Policy and Economic Regulation......Page 26 4. Social Regulation: Imperfect Information and Externalities......Page 40 5. Public Production......Page 74 6. Policies to Correct Market Failures: Synthesis and Assessment......Page 86 7. Market Failure and Social Goals Policies: Common Failures and Conflicts......Page 100 8. Policy Recommendations Motivated by Policymakers' Learning......Page 106 9. Microeconomics Policy Research and the Policy Community......Page 116 References......Page 122 Index......Page 138