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
Jack and Jill live alone on  an island. Their labour supply schedules are  identical and given by L = (1 - t)w, where t is the income tax rate and w denotes the wage. Jill's wage i

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

what is volume of production and the factors influencing them

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 wage increase of fixed income groups'' will affect the overall economy? what are effects exactly?

Q. Show the Redistribution Policy? We know that despite policy interventions the disparity of income has been increasing in nearly all the countries. United States is highly un

As we know now that in policy process, policy outcome may differ from the social planner outcome not only because different policies may be chosen but because a given policies may


examine the efficiency of quantitative credit control instruments.

What is the link between efficiency wages and shirking? There are two firms A and B identical in all respects except the following. In firm A increased expenditure on monitoring co