Jason Welker's Library tagged "market failure" → View Popular, Search in Google

economic transactions create spillover benefits or costs that weren’t intended consequences of the initial transaction.

Professor Haab has struggled to think of good examples of economic transactions involving positive externalities of production. We can think of countless examples of transactions where positive externalities of consumption exist, such as

Oct

2008

How Government Stoked the Mania - WSJ.com

Is the financial crisis purely a result of market failure? Professor Russel Roberts doesn't think so. Read this great post to learn how the government may be the real culprit behind our financial mess.

"...before we conclude that markets failed, we need a careful analysis of public policy's role in creating this mess. Greedy investors obviously played a part, but investors have always been greedy, and some inevitably overreach and destroy themselves. Why did they take so many down with them this time?

Part of the answer is a political class greedy to push home-ownership rates to historic highs -- from 64% in 1994 to 69% in 2004. This was mostly the result of loans to low-income, higher-risk borrowers. Both Bill Clinton and George W. Bush, abetted by Congress, trumpeted that rise as it occurred. The consequence? On top of putting the entire financial system at risk, the hidden cost has been hundreds of billions of dollars funneled into the housing market instead of more productive assets.

Beware of trying to do good with other people's money. Unfortunately, that strategy remains at the heart of the political process, and of proposed solutions to this crisis."

online.wsj.com/...SB122298982558700341.html

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economics financial crisis market failure