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Market Failure or Success

The New Debate

Edited by Tyler Cowen and Eric Crampton

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.
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The Editors and publisher wish to thank the following who have kindly given permission for the use of copyright material. American Economic Association for ÔToward a general theory of wage and price rigidities and economic fluctuationsÕ, J. Stiglitz, American Economic Review 89: 2 (1999): 75Ð80; ÔAn empirical examination of information barriers to trade in insuranceÕ, John Cawley and Tomas Philipson, American Economic Review 89: 4 (1999): 827Ð46; ÔA direct test of the ÒlemonsÓ model: the market for used pickup trucks,Õ Eric W. Bond, American Economic Review 72: 4 (1982): 836Ð40; ÔCooperation in public-goods experiments: kindness or confusion?Õ, James Andreoni, American Economic Review 85: 4 (1995): 891Ð904. Basil Blackwell Publishers for permission to draw upon ÔThe demand for and supply of assuranceÕ, Daniel B. Klein, Economic Affairs (2001): 4Ð11. Cambridge University Press for ÔPublic Choice ExperimentsÕ, Elizabeth Hoffman, in Perspectives on Public Choice, 1997, edited by Dennis Mueller, 415Ð26. Cambridge, MA. Edward Elgar Publishers for ÔPath dependence, its critics and the quest for Òhistorical economicsÓ Õ, Paul David, in Evolution and Path Dependence in Economic Ideas: Past and Present, P. Garrouste and S. Ioannides (eds), 2001. Elsevier Science for ÔGroup size and the voluntary provision of public goodsÕ, R. Mark Isaac, James M. Walker and Arlington W. Williams, Journal of Public Economics 54 (1994): 1Ð36; ÔNon-prisonerÕs dilemmaÕ, Gordon Tullock, Journal of Economic Behavior and Organization 39: 4 (1999): 455Ð8. Independent Institute for ÔBeta, Macintosh, and other fabulous talesÕ, in Stan J. Liebowitz and...

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