Economics, Market Failure, and Professional Dilemmas

RATIONALE

The Economics, Market Failure, and Professional Dilemmas topic provides students with an introduction to market failure. This session focuses on issue recognition and it reviews economic and ethical methodologies to frame and analyse problems for successful decision mak...
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LEARNING METHODS

Upon completion, students will:

  • Understand market failures from a policy perspective, their origin and consequences – particularly with regard to corrupt practises;
  • Devise an appropriate course of action towards various types of market failures th...
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STUDY QUESTIONS
  1. Why do market failures tend to bring about laws or regulations to counter their effects? What’s the role of CSR in providing public good, according to Belsey?
  2. Based on the Edwards article, which market failures or imperfections are present in the “Lobs...
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CORE LITERATURE
Market failures within poor institutions: the effects of bureaucrats’ rent-seeking activity
Recent research has demonstrated that institutions play a fundamental role in economic performance. The establishment of an appropriate institutional infrastructure has been shown to be essential for achieving economic development. Indeed, the presence of solid institutions such as constitutional or...

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Core Concepts
Government Failure and Corruption
The article presented herein responds to the nature of corruption typical for the Czech Republic. Corruption in the Czech Republic concentrates into the sphere of the public sector, the allocation of public means, into the murky sphere where interests of political parties, state administration and b...

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Case
The Price of Lobster Thermidor
The life of a Miskito Amerindian lobster-diver off Honduras's Caribbean coast is mostly nasty and often short. Until foreign pressure recently brought some improvements, roughly one diver in four ended paralyzed or dead bringing this prized seafood to richer people's tables....

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Case
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ADDITIONAL LITERATURE
An analysis of consumer response to corruption
The economics of corruption lacks literature on consumer responses to corruption scandals. This paper uses Italy's 2005/06 Calciopoli sport corruption case to analyse fan (consumer) response. Using a difference-in-difference estimation method, the authors find that consumer revenue fell among the ac...

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Primary Source
Profit-seeking punishment corrupts norm obedience
State sanctioned punishment often involves depriving violators of money, labor or other resources. This, however, can create rent-seeking behavior in authorities, and so corruption ensues. This paper creates a novel experiment which shows that profit-seeking enforcement reduces the efficacy of punis...

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Public–Private Partnerships and Agency Problems: The Use of Incentives in Strategies to Combat Corruption
The chapter analyzes the model of public–private partnerships in the prevention of corruption. It offers an extensive illustration of the “hybrid governance” system that has been conceived in this field, highlighting how the State plays the role of a “monitor of last resort” which delegate...

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