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Dysfunction of resource allocation by market mechanism and State intervention in corrections

Author

Listed:
  • Daniel Tobă
  • Laurenţiu Dragomir

Abstract

Reference system to which it is discussed involvement in the economy market with perfect competition, perfect competition system, characterized by absolute lack of opportunities to influence the price for participating business entities. Neoclassical economics has shown that market with perfect competition ensures optimum identity - efficiency - balance. In reality, the functioning of free market competition on a mecamism imperfect present, to varying degrees, "defective", "gaps" or "failures" complete which result in the removal of optimum-efficiency economy-balance identity and justifying the existence of a compensatory mechanism (correction) of public action. To summarize, in terms of objectives, involvement of the state presupposes that the following roles: allocation role, subordinate goal of efficiency, distributive role, subordinate to the objective of social equity and subordinated to the objective of regulating the role of general equilibrium.

Suggested Citation

  • Daniel Tobă & Laurenţiu Dragomir, 2010. "Dysfunction of resource allocation by market mechanism and State intervention in corrections," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 1(38), pages 190-198, May.
    • Handle: RePEc:aio:aucsse:v:1:y:2010:i:8:p:190-198
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    More about this item

    Keywords

    market failure; merit goods; public goods; externalities; state failure;
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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