A quick question for AC Peeps: Market failure

[almostbusto]

tolbiny do you seriously not think dodo farming would be insanely profitable if you just came by 2 dodo's? seriously there is no room for debate on that matter.

at the total population of the dodo diminished the marginal cost associated with killing off one more dodo skyrocketed. this is basic economics as things get more scarce their value rises. there definitely would be a demand for dodos today if they did exist.

if some hunter knowingly came across the last dozen or so dodos in existence, he would have been much better off if he would have kept them as an investment rather than killed them.

however that obviously did not happen.

[pvn]

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tolbiny do you seriously not think dodo farming would be insanely profitable if you just came by 2 dodo's? seriously there is no room for debate on that matter.

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Also, if I found the magic gold-[censored] goose, it would be insanely profitable.

[tolbiny]

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tolbiny do you seriously not think dodo farming would be insanely profitable if you just came by 2 dodo's? seriously there is no room for debate on that matter.

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Seriously, did you actually read the post? Economic transactions have a cost- not letting them go extinct would have cost the settlers far more than it was worth to them since it was impossible to travel to islands without bringing rats (among the main culprits in their extinction). Again this is econ 101- you can't both settle on, cut down large tracts of forests, bring pets and rodents to the island without wiping out a large flightless bird that had lived for extended periods of time without predators. So I ask you again, how much would you have to go back and offer all the settlers to not go to that island?


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if some hunter knowingly came across the last dozen or so dodos in existence, he would have been much better off if he would have kept them as an investment rather than killed them.

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Again imperfect information /= market failure.

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at the total population of the dodo diminished the marginal cost associated with killing off one more dodo skyrocketed. this is basic economics as things get more scarce their value rises. there definitely would be a demand for dodos today if they did exist.

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Again, please, read some Rothbard. At least perhaps you will stop arguing that perfect markets and perfect information are our benchmarks. At the very least perhaps you will get the idea that Austrians at least don't generally follow this train of thought.

PS to any ACer/Austrian who reads this, i am thinking specifically of a section in one of the early chapters of America's Great Depression where Rothbard lays out this argument. If you think I'm wrong/mixing up authors (i don thins a lot and don't have a copy around to check) please chime in.

[Nielsio]

almostbusto,

As far as I can tell you haven't proposed a solution to the so called 'market failure'. It's in this solution that you have to show that the same 'problems' do not also occur.

For example if you're complaining about the lack of information, how can centrally planning these things possibly ever solve this problem?

And then there is the violence that has to make everyone comply to this stuff; which has endless problems of it's own.

So let's hear it.

[Nielsio]

Market failure:

[Misfire]

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Can you give an example of a 'market failure'? Can you also give your proposal how to deal with such?

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Here are a couple.





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Um, Enron was a case of FRAUD, not market failure.

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You realize you posted a map of some of the most restrictive markets in the world, right?

[Misfire]

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this adds cost to the transaction. which effectively adds a "spread" to the transaction. this prevents all beneficial transactions from taking place.

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I'm done reading your posts.

[Iq75]

How about this imaginary example as a market failure:
There’s a big lake in the middle of a continent that has a lot of fish. There are 1000 fishers. The rate that they can fish so that the fish population can renew itself is estimated as 1 000 000 fish/year. If they do more than 1 500 000/ year there is a huge chance that the fish population will extinct.

One fisher can fish 5 000 fish a year and to maximise his expectation he will do so. But if all of them do it there will no longer be fish and the expectation will be 0. For the market as whole it would be beneficiary if they all would fish something like 1000 /year. But they cant come into agreement because 25 % of the fisher say that a) restrictions would hurt our economical interests b) there is no consensus among scientists that fish extinction would happen c) all of the 1000 fishers will not participate and thus any restriction would not work.

A state could make the restrictions to happen but markets without a state would fail.

[Nielsio]

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How about this imaginary example as a market failure:
There’s a big lake in the middle of a continent that has a lot of fish. There are 1000 fishers. The rate that they can fish so that the fish population can renew itself is estimated as 1 000 000 fish/year. If they do more than 1 500 000/ year there is a huge chance that the fish population will extinct.

One fisher can fish 5 000 fish a year and to maximise his expectation he will do so. But if all of them do it there will no longer be fish and the expectation will be 0. For the market as whole it would be beneficiary if they all would fish something like 1000 /year. But they cant come into agreement because 25 % of the fisher say that a) restrictions would hurt our economical interests b) there is no consensus among scientists that fish extinction would happen c) all of the 1000 fishers will not participate and thus any restriction would not work.

A state could make the restrictions to happen but markets without a state would fail.

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So your solution is: let's give one group of people a massive amount of physical power, disarm the rest, and then let the powerless give the powerful a wishlist.

How is that solving a problem? How is that not creating massive amounts of problems that are of the same sort (problem of the commons, caused by non-ownership) but much more dangerous?

[TomCollins]

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How about this imaginary example as a market failure:
There’s a big lake in the middle of a continent that has a lot of fish. There are 1000 fishers. The rate that they can fish so that the fish population can renew itself is estimated as 1 000 000 fish/year. If they do more than 1 500 000/ year there is a huge chance that the fish population will extinct.

One fisher can fish 5 000 fish a year and to maximise his expectation he will do so. But if all of them do it there will no longer be fish and the expectation will be 0. For the market as whole it would be beneficiary if they all would fish something like 1000 /year. But they cant come into agreement because 25 % of the fisher say that a) restrictions would hurt our economical interests b) there is no consensus among scientists that fish extinction would happen c) all of the 1000 fishers will not participate and thus any restriction would not work.

A state could make the restrictions to happen but markets without a state would fail.

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Or this problem could be solved if one person (or a group) owned the lake (no ownership in your case). Then they could charge "rent" to people fishing in it, and limit the number of fish that are caught to ensure that they can still get future rent. Problem solved.

The main problem is that no one owns the lake and can say who can and cannot be there.