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Government Failure — Four Types

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  • Wilfred Dolfsma

Abstract

Economists tend to see the market as a default option for social order and a role for government only when markets fail. Developing a convincing analysis of the role of government in economic processes, however, needs to start by considering government failure in its own terms. Drawing on insights from institutional economics, law and economics and the philosophy of law, emphasizing the necessity of rules for the economy, this paper develops the concept of government failure. The paper identifies and develops four different types of government failure. Government can set rules for economic processes and actors that are (1) too specific, (2) too broad, (3) that are arbitrary, or (4) that conflict with other rules it has set out to address other, related issues (possibly primarily non-economic). Government failure is illustrated in the context of Intellectual Property Right (IPR) law as it relates to Anti-Trust law.

Suggested Citation

  • Wilfred Dolfsma, 2011. "Government Failure — Four Types," Journal of Economic Issues, Taylor & Francis Journals, vol. 45(3), pages 593-604.
  • Handle: RePEc:mes:jeciss:v:45:y:2011:i:3:p:593-604
    DOI: 10.2753/JEI0021-3624450304
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    File URL: http://hdl.handle.net/10.2753/JEI0021-3624450304
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    Cited by:

    1. Víctor Valdés, 2013. "Fallas del mercado y del gobierno en el sector aeronáutico mexicano," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 15(29), pages 253-283, July-Dece.
    2. Manuela, Wilfred S. & de Vera, Manuel J., 2015. "The impact of government failure on tourism in the Philippines," Transport Policy, Elsevier, vol. 43(C), pages 11-22.

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