Case for the market - pigovian analysis, Public Economics

Case for the Market 

With  the objective of maximising total value of output  focused on  observing real  factors of production, through the  logical  'tool  of marginal product,  and the awareness of obstacles  to movement and divergences of private and  social product,  Pigou  set  about judging  how  well  a  market system performs.  He considered the market  allocation mechanism  as the default scheme and was interested in  comparing the optimal resource configuration to that yielded by the market system. 

Pigou  thought  it  a  settled matter  that  the  market system often  generated  an optimal solution and, thus, did not spend much  time or effort explaining this result. Self-interested resource owners, unhampered  by  ignorance, seeking to maximise their private returns, will allocate resources so that marginal private net products will everywhere deviate by  less than the costs of movement and, thus,  the  sum  total of returns will  attain  a maximum.  If  private  and  social products are equivalent, the free play of self-interest yields a socially optimal allocation. 

Posted Date: 10/26/2012 5:51:53 AM | Location : United States







Related Discussions:- Case for the market - pigovian analysis, Assignment Help, Ask Question on Case for the market - pigovian analysis, Get Answer, Expert's Help, Case for the market - pigovian analysis Discussions

Write discussion on Case for the market - pigovian analysis
Your posts are moderated
Related Questions
Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

This variant of coordination problem seeks the answer to why some countries fail to grow when public and private rent seeking makes property rights insecure. One reason is that re

Deductibles and copayments are two common incentive tools in insurance. (a)Explain which informational problems each tool primarily addresses. (b) If only one had to be used, indic

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4



What are the objectives of pubic finance

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Public Finance was always dealing with intervention through fiscal instruments, including federal relationships between different tiers of governments and later on it subsumed Publ

You can choose any one from the four topics listed in the following: I. Health economic theory and practice 1. Based on your work experience, expertise, or the field