In this article we will discuss about how negative externality becomes a source of economic inefficiency. Suppose John an ambitious rock musician, resort to the practice of playing electronic guitar, every day for five hours in his house. However John’s immediate neighbor, Peter does not enjoy listing to the ear-storming guitar notes. The practice time of John differs from socially [...]
This article throws light upon the various instances of market failure which calls for government intervention for correction. The instances are: 1. Externalities 2. Provision of Public Goods 3. Decreasing Cost 4. Uncertainty as a Source of Market Failure 5. The Distribution Function 6. Market Efficiency and Income Distribution. Market Failure: Instance # 1. Externalities: Externalities refer to spillover or [...]
In this article we will discuss about the multiple theory of public household. Economists have paid much attention to the formulation of theories that examine the problems of consumer households, business firms, trade unions and other decision making units in the economy. However they have not made any serious attempt to develop a corresponding theory of the public economy. The [...]