Recent years have seen the development of new theories of market failure based on
asymmetric information and network effects. According to the new paradigm, we can
expect substantial failure in the markets for labor, credit, insurance, software,
new technologies and even used cars, to give but a few examples. This volume brings
together the key papers on the subject, including classic papers by Joseph Stiglitz,
George Akerlof and Paul David. The book provides powerful theoretical and empirical
rebuttals challenging the assumptions of these new models and questioning the usual
policy conclusions. It goes on to demonstrate how an examination of real markets and
careful experimental studies are unable to verify the new theories. New frontiers
for research are also suggested.
Subjects: economics and finance, industrial economics
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