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
QUESTION 1: Assuming that you are a consultant on the ‘Light Rail' project and you are asked to forecast demand for this mode of transport. What are the forecasting techniq

State ramsey rule of optimal commodity taxation and the intuition for it


what is volume of production and the factors influencing them

what are the costs and consequences of providing the subsidies and welfare?

Q. Why does government undertake an economic activity? If ever an activity has large externality or spill over and includes a large number of people, it may be found better th

what is multinational? how can they help developing economies?

The require for illegal drugs is inelastic. Much of the expenditure on illegal drugs comes from crime. Suppose these statements to be correct, 1.    How will a successful campai

how do a traditional economy, a market, a centrally planned economy, and a mixed economy differ?

QUESTION: a) How do returns to scale and returns to factor affect the shapes of the AC in the Long-run and short-run respectively? b) "Standard of living has to be measure