Jim Devine wrote:
My
question is instead: Are individual
property (private-ownership)
rights _ever_ "duly stipulated"?
aren't external costs and benefits
ubiquitous?
Private ownership rights can be duly stipulated. That is a legal
issue -- an issue of adjudication of formal rights.
The notion of market failure refers to situations in which legally
established markets fail to deliver optimal allocations. The
technological and/or economic sources of those failures can be
multiple, externalities being one set of them.
The tragedy of the commons is the opposite. It's a "government"
failure, i.e. a failure of the public sector (the public or its agent,
the "government") to turn out optimal allocations.
Regardless of the veracity of Hardin's story, it'd be easy for
historians to document a myriad other cases in which free access to a
rivalrous good becomes socially inefficient. But so what? Marxists
don't deny this possibility. Marxists don't advocate immediate free
distribution of all goods.
In economic *theory*, the issue of which form of ownership works best
in general is undecided and, ultimately, undecidable. Because theory
necessarily postulates abstract settings to, then, determine their
logical consequences. In the abstract, perfect markets and perfect
communism are equally efficient ("Pareto equivalent"). We can
juxtapose a long list of market failures to a long list of government
failures, but that won't settle anything.
Eugene Coyle wrote:
Isn't market failure cost shifting success?
Right. A social failure can be a private boon.
