IDEAS home Printed from https://ideas.repec.org/a/cpn/umkeip/v18y2019i1p5-15.html
   My bibliography  Save this article

The institutional dimension of market failure

Author

Listed:
  • Wojciech Giza

    (Cracow University of Economics)

Abstract

Motivation: At the turn of the 19th and 20th centuries, institutionalism was presented by T. Veblen as an alternative to neoclassical economics. On the basis of neoclassical economics, in addition to the explanation how an effectively functioning market leads to maximization of welfare, we also find a market failure analysis. The main theme of the presented study is an attempt to synthesize these concepts, in particular to show how the institutional approach modifies the perception of the market failure. Aim: The aim of the article is to analyze the market failure on the basis of institutional economics. In addition, an attempt was made to determine how institutional solutions can result in limiting certain types of market failure. Results: In the light of the analysis carried out, the analysis of market failure based on Veblen’s institutionalism is not justified. However, the relation between the New Institutional Economics and the neoclassical interpretation of market failure can be noticed, mainly, when it comes to explaining the reasons for the existence of markets and the methods used to counteract external effects.

Suggested Citation

  • Wojciech Giza, 2019. "The institutional dimension of market failure," Ekonomia i Prawo, Uniwersytet Mikolaja Kopernika, vol. 18(1), pages 5-15, March.
    • Handle: RePEc:cpn:umkeip:v:18:y:2019:i:1:p:5-15
    DOI: 10.12775/EiP.2019.001
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.12775/EiP.2019.001
    Download Restriction: no
    File URL: https://libkey.io/10.12775/EiP.2019.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. David Colander, 2018. "Framing the Economic Policy Debate," Chapters, in: How Economics Should Be Done, chapter 8, pages 103-116, Edward Elgar Publishing.
    2. Veblen, Thorstein, 1899. "The Preconceptions of Economic Science I," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 13.
    3. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    4. Veblen, Thorstein, 1900. "The Preconceptions of Economic Science III," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 14.
    5. Veblen, Thorstein, 1899. "The Preconceptions of Economic Science II," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 13.
    6. Williamson, Oliver E, 1971. "The Vertical Integration of Production: Market Failure Considerations," American Economic Review, American Economic Association, vol. 61(2), pages 112-123, May.
    7. Tibor Scitovsky, 1954. "Two Concepts of External Economies," Journal of Political Economy, University of Chicago Press, vol. 62(2), pages 143-143.
    8. Thorstein Veblen, 1899. "The Preconceptions of Economic Science," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 13(4), pages 396-426.
    9. Bruce C. Greenwald & Joseph E. Stiglitz, 1986. "Externalities in Economies with Imperfect Information and Incomplete Markets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(2), pages 229-264.
    10. Thorstein Veblen, 1900. "The Preconceptions of Economic Science," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 14(2), pages 240-269.
    11. Thorstein Veblen, 1899. "The Preconceptions of Economic Science," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 13(2), pages 121-150.
    12. Francis M. Bator, 1958. "The Anatomy of Market Failure," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 72(3), pages 351-379.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Luigi Mittone & Gian Paolo Jesi, 2016. "Heuristic Driven Agents in Tax Evasion: an Agent-based Approach," CEEL Working Papers 1605, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    2. Agnès Labrousse & Sandrine Michel, 2017. "Accumulation regimes," Post-Print hal-01719977, HAL.
    3. Matson, Erik W., 2021. "Satisfaction in action: Hume's endogenous theory of preferences and the virtues of commerce," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 849-860.
    4. Alberto Ruiz‐Villaverde, 2019. "Editor’s Introduction: The Growing Failure of the Neoclassical Paradigm in Economics," American Journal of Economics and Sociology, Wiley Blackwell, vol. 78(1), pages 13-34, January.
    5. Naoki Matsuyama, 2021. "The influence of Tidology and Astronomy in Alfred Marshall’s economics: a reassessment of his economic method for the analysis of periodic and secular variations," Evolutionary and Institutional Economics Review, Springer, vol. 18(2), pages 549-567, September.
    6. Tae-Hee Jo, 2016. "What If There Are No Conventional Price Mechanisms?," Journal of Economic Issues, Taylor & Francis Journals, vol. 50(2), pages 327-344, April.
    7. Olivier Mesly & María del Carmen de la Orden de la Cruz & Juan Francisco Núñez Grapain, 2014. "Preferred shares in Spain: a case of financial predation?," Economía, Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela, vol. 39(37), pages 77-99, January-J.
    8. Keith Tribe, 2010. "Marshall and Marshallian Economics in Britain," Chapters, in: Tiziano Raffaelli & Giacomo Becattini & Katia Caldari & Marco Dardi (ed.), The Impact of Alfred Marshall’s Ideas, chapter 4, Edward Elgar Publishing.
    9. Guilherme Silva Fracarolli, 2021. "Global Markets, Local Issues: The Hegemonic Process of Agri-Food Construction to Present Challenges," Land, MDPI, vol. 10(11), pages 1-24, November.
    10. Roger E. Backhouse & Bradley W. Bateman & Steven G. Medema, 2010. "The Reception of Marshall in the United States," Chapters, in: Tiziano Raffaelli & Giacomo Becattini & Katia Caldari & Marco Dardi (ed.), The Impact of Alfred Marshall’s Ideas, chapter 6, Edward Elgar Publishing.
    11. Steven G. Medema, 2020. "The Coase Theorem at Sixty," Journal of Economic Literature, American Economic Association, vol. 58(4), pages 1045-1128, December.
    12. Marco FRIGERIO & Daniela VANDONE, 2018. "Virtuous or Vicious? Development Banks in Europe," Departmental Working Papers 2018-07, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    13. Nathalie Berta, 2016. "On the definition of externality as a missing market," Post-Print halshs-01277990, HAL.
    14. António Madureira & Nico Baken & Harry Bouwman, 2011. "Value of digital information networks: a holonic framework," Netnomics, Springer, vol. 12(1), pages 1-30, April.
    15. Marciano, Alain, 2011. "Buchanan on externalities: An exercise in applied subjectivism," Journal of Economic Behavior & Organization, Elsevier, vol. 80(2), pages 280-289.
    16. Blind, Georg, 2015. "Behavioural rules: Veblen, Nelson-Winter, Oström and beyond," MPRA Paper 66866, University Library of Munich, Germany.
    17. Maurice Lagueux, 2010. "The residual character of externalities," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 17(4), pages 957-973.
    18. Nathalie Berta, 2017. "On the definition of externality as a missing market," Post-Print hal-02095696, HAL.
    19. Archibald, Sandra O. & McCorkle, Chester O. Jr & Howitt, Richard E., 1986. "A Dynamic Analysis Of Production Externalities : Pesticide Resistance In California Cotton," Working Papers 225802, University of California, Davis, Department of Agricultural and Resource Economics.
    20. K.Vela Velupillai, 2014. "One Hundred Years Ago - Economic Theory in 1914," ASSRU Discussion Papers 1408, ASSRU - Algorithmic Social Science Research Unit.

    More about this item

    Keywords

    market failure; institutional economics; neoclassical economics;
    All these keywords.

    JEL classification:

    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpn:umkeip:v:18:y:2019:i:1:p:5-15. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Miroslawa Buczynska (email available below). General contact details of provider: http://www.wydawnictwoumk.pl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.