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Obnoxious Markets

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  • Kanbur, Ravi

Abstract

Certain markets evoke popular discomfort, distrust and even outrage. Trade in arms, drugs, toxic waste, child labor and body parts, for example, elicits these reactions to different degrees. This paper asks—what is it about some markets that brings about these responses? It is argued that three key parameters—extremity, agency and inequality—have a bearing on our intuitive reactions and serve to differentiate markets. The more extreme are the likely outcomes of a market, the further is the agent who acts in the market from agents who bear the consequences of those actions, and the greater is the degree of inequality in market relations, the more likely it is that the operation of the market will provoke discomfort. At the extreme, when outcomes are potentially extreme, agency is minimal and market relations are highly unequal, the market in question may deserve the label “obnoxious”. However, it is not obvious that the best or only answer to an obnoxious market is to attempt to ban it. The forces underlying the market may not disappear, and such attempted bans may in fact intensify the problems of extremity, agency and inequality. While judicious regulation remains an important tool, a complementary approach is to address the underlying issues directly—extremity through safety nets, agency through information, and inequality through redistribution.

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Bibliographic Info

Paper provided by Cornell University, Department of Applied Economics and Management in its series Working Papers with number 127655.

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Date of creation: Jul 2001
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Handle: RePEc:ags:cudawp:127655

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Keywords: Marketing;

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Cited by:
  1. Mason, Simon A. & Muller, Adrian, 2007. "Analyzing economic market interactions as conflicts: New concepts to assess market-based policy instruments," Ecological Economics, Elsevier, vol. 61(1), pages 81-90, February.
  2. Mookherjee, Dilip & von Lilienfeld-Toal, Ulf, 2006. "Bankruptcy law, bonded labor and inequality," Proceedings of the German Development Economics Conference, Berlin 2006 18, Verein für Socialpolitik, Research Committee Development Economics.
  3. Branko Milanovic, 2003. "The Two Faces Of Globalization: Against Globalization As We Know It," Development and Comp Systems 0303007, EconWPA.

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