In my opinion, "market failure" is a peculiar term because what fails is not the market but the groundless expectation that the market will do something it has no capability of doing. What fails is a "theory" that the market excels at optimally allocating scarce resources to given ends. But of course it is an overstatement to call that a theory. It is a prejudice that prevails in face of ample demonstration to the contrary.
On Fri, Jan 27, 2012 at 11:45 AM, 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 > -- Sandwichman
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