The Market Failure Approach to Regional Economic Development Policy
In: Readings in Urban Economics: Issues and Public Policy
This article argues that regional economic development policies should aim to correct failures of private markets to achieve efficiency. Market failures that may rationalize regional economic development policies include involuntary unemployment, involuntary underemployment, fiscal benefits, agglomeration economies, research spillovers, imperfect human capital markets, imperfect information markets, and imperfect financial markets. Development policies to correct market failures may be evaluated by the nonmarket benefits created for society. The market failure approach focuses policymakers' attention on areas where private market performance is weakest and allows comparisons of development policies.
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|This chapter was published in: John P. Blair & Laura A. Reese (ed.) Readings in Urban Economics: Issues and Public Policy, Sage Publications, pages 14-24, 1999.|
|This item is provided by W.E. Upjohn Institute for Employment Research in its series Book chapters authored by Upjohn Institute researchers with number tjbsage.|
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