Wednesday, March 07, 2007

Are you a free marketer?

Charles Wheelan has an interesting way of applying market imperfections (externalities in particular) here

Read his questions/answers to see whether you would count as a "free market advocate."

This part was funny

"Absolutely. If you believe in markets when they work well, then you have to understand how they need to be tweaked when they don't. If page 10 of any introductory economics text explains the wonders of supply and demand, page 12 usually explains that markets don't deliver an efficient outcome when eager buyers and sellers impose some harm, or negative externality, on a third party."

Actually in our textbook it is not. But I teach it that way.

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