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Austrian Approach to the 3rd Duty of the Sovereign in the Wealth of Nations

Author

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  • Valentin Petkantchin

    (CERGAM-CAE, Aix-Marseille Université)

Abstract

Economists seem quasi unanimous about the fact that Adam Smith would have had the intuition of the existence of public goods and market failures. Musgrave-1985, among others, perfectly summarizes this widely held position in modern economic thought. In a normative sense, Smith would have entrusted their production to the government and their supply would constitute precisely the 3rd duty of the sovereign in the Wealth of Nations. However, Smith – as Austrian economists since Menger – was mainly interested in the role of institutions in the economy. An institutional approach to the 3rd duty of the sovereign – consisting in the establishment of property rights on public works and in the incorporation of joint stock companies – allows us to reconcile Smith thought with the laissez-faire tradition.

Suggested Citation

  • Valentin Petkantchin, 2004. "Austrian Approach to the 3rd Duty of the Sovereign in the Wealth of Nations," CAE Working Papers 21, Aix-Marseille Université, CERGAM.
  • Handle: RePEc:cgm:wpaper:21
    as

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    File URL: http://junon.u-3mrs.fr/afa10w21/RePEc/cgm/wpaper/DR_21_0405_petkanchin.pdf
    File Function: First version, 2004
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    References listed on IDEAS

    as
    1. Coase, R H, 1974. "The Lighthouse in Economics," Journal of Law and Economics, University of Chicago Press, vol. 17(2), pages 357-376, October.
    2. Coase, R H, 1977. "The Wealth of Nations," Economic Inquiry, Western Economic Association International, vol. 15(3), pages 309-325, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Adam Smith; public goods; externalities; institutions; laissez-faire;

    JEL classification:

    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • H1 - Public Economics - - Structure and Scope of Government
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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