You're the economist, but my sense of market failure is that it refers to the failure of the market to supply a necessary (and possible) social good because the production and distribution of latter good fails to satisfy the needs of for-profit corporations to bring it to market. So the patent would be a way of aiding that market in creating the effective demand for the supply at the price where profitable production would be possible, therefore preventing market failure. Other more direct means might be subsidizing the production in some way. In any case, I think the important frame is the role of the market in society. It is market failure if the market doesn't supply (as it should according to the neoclassicals) an obvious need or demand, necessitating, therefore, an extra-market intervention in order to meet those needs.
s On Fri, Jan 27, 2012 at 13:45, Eugene Coyle <[email protected]> wrote: > What is the definition of "Market Failure"? > > > Specifically, is the following Market Failure or something else? > > Consider a pharmaceutical company which develops a drug after the > expenditure of say $1 billion and is able to produce a daily dose for 50 > cents. The company considers the volume to be sold and realizes that it must > get, say, $5.00 per pill to make a profit. The formula for the pill is > public. Without a patent on the drug it can't sell for $5.00, so it needs > patent protection to be profitable. > > Is the need for patent protection "market failure" or is that something else? > > If something else, what is that called? > > Gene > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
