For this assignment, you are analyzing a city-level policy issue from the perspective of the market failure framework. Find a news article about a way that any urban government (it does not have to be New York City) has responded to the one of the types of market failure (monopoly, information problems, externalities, pure public goods) OR a proposal an organization, policymaker, or other individual has made to change policy in a way that would respond to one of these market failures.
Good sources for policy information related to urban policy include:
The New York Times, or another city newspaper (Philadelphia Inquirer, Los Angeles Times, and Chicago Tribune may be good sources) – metro section
Summarize the article, and include the following in your response:
What is the policy or policy proposal? To what type of market failure does the policy respond? (Think about why outcomes would be efficient or inefficient if producing this good or service were left to the market). Or, do you think there is no market failure and there is or is not some other justification to act?
Does the type of policy action described correspond to the way Bluestone et al describe responses to market failures (pp 291-303)?
How does the policy/policy proposal in your example balance the goals of equity and efficiency (a topic discussed in the section on building and paying for bridges, pp 310-313)?
Does the article provide information about how successful or unsuccessful this policy has been, if it has been enacted?
What other policy options would you see for addressing this policy problem? Is your idea similar to the government responses that are described in pp 291-303?
You also read a book chapter by Stiglitz on the principles of regulation. Discuss the implications of what he describes as â€œgovernment failureâ€ and his take on market failure as they relate to the issue identified in your paper, incorporating in your discussion responses to questions such as the following:
What is government failure?
What are the risks of government failure that relate to your policy, if any?
What distributive (justice) concerns arise with regard to this issue?
How would a more free market-oriented (neoclassical) economist and an economist with more of a political economy view (such as Stilwell) or another of the views on economics presented in week 1 see this policy issue differently?
Finally, you have read or listened to alternative views on the theories of government and market failure (and the role of government in markets), that were expressed by Sekera, Polanyi, and Fitzgerald. In about a page or more, describe how the points of view of these authors might lead to a different argument about the best way to address the policy problem you raise. Would they view a market or government failure at work? What would they say the role of government should be in addressing this problem?