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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.

Suggested Citation

  • Kanbur, Ravi, 2001. "Obnoxious Markets," Working Papers 127655, Cornell University, Department of Applied Economics and Management.
    • Handle: RePEc:ags:cudawp:127655
    DOI: 10.22004/ag.econ.127655
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    References listed on IDEAS

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    1. Kanbur Ravi, 2001. "Economic Policy, Distribution and Poverty: The Nature of Disagreements," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 7(2), pages 122-145, April.
    2. Lipton, Michael & Ravallion, Martin, 1995. "Poverty and policy," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 41, pages 2551-2657, Elsevier.
    3. Grootaert, Christiaan & Kanbur, Ravi, 1995. "Child labor : a review," Policy Research Working Paper Series 1454, The World Bank.
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    Cited by:

    1. Milanovic, Branko, 2003. "The Two Faces of Globalization: Against Globalization as We Know It," World Development, Elsevier, vol. 31(4), pages 667-683, April.
    2. 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.
    3. Dilip Mookherjee & Ulf von Lilienfeld-Toal, 2005. "Bankruptcy Law, Bonded Labor and Inequality," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series DP-155, Boston University - Department of Economics.

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