IDEAS home Printed from https://ideas.repec.org/p/wpa/wuwpge/9609001.html
   My bibliography  Save this paper

Technical Change, Pecuniary Externality and the Market Failure

Author

Listed:
  • Hom M. Pant

    (University of Tasmania)

Abstract

First, a small open economy is analyzed to show that even a complete and competitive market may fail to produce Pareto-efficient outcomes under conditions of changing technology. It is mainly because price- taking agents can make the prices they face by changing their technology or technique of production. It is then shown that this result holds equally true for the regional sub-economies of this economy. A legal provision of R&D tax/subsidy based on payroll changes is shown to be a second best policy that corrects the market failure with a small dead- weight loss. This policy does not require actual tax collection or subsidy payment and may be used by regional governments to correct technological market failure at regional levels. The provision improves the functioning of the market by eliminating the mismatch between the type of production sector and the type of technological/technical change they introduce.

Suggested Citation

  • Hom M. Pant, 1996. "Technical Change, Pecuniary Externality and the Market Failure," GE, Growth, Math methods 9609001, EconWPA, revised 30 Apr 1997.
    • Handle: RePEc:wpa:wuwpge:9609001
    Note: Type of Document - Word 7.0; prepared on IBM PC ; to print on HP LaserJet 4; pages: 20; figures: included
    as

    Download full text from publisher

    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/ge/papers/9609/9609001.pdf
    Download Restriction: no
    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/ge/papers/9609/9609001.doc.gz
    Download Restriction: no
    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/ge/papers/9609/9609001.ps.gz
    Download Restriction: no
    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/ge/papers/9609/9609001.html
    Download Restriction: no

    References listed on IDEAS

    as
    1. Wildasin, David E, 1988. "Indirect Distributional Effects in Benefit-Cost Analysis of Small Projects," Economic Journal, Royal Economic Society, vol. 98(392), pages 801-807, September.
    2. Foster, Edward, 1983. "Rents and Pecuniary Externalities in Cost-Benefit Analysis: Reply," American Economic Review, American Economic Association, vol. 73(5), pages 1171-1172, December.
    3. Makowski, Louis & Ostroy, Joseph M, 1995. "Appropriation and Efficiency: A Revision of the First Theorem of Welfare Economics," American Economic Review, American Economic Association, vol. 85(4), pages 808-827, September.
    4. Ng, Yew-Kwang, 1983. "Rents and Pecuniary Externalities in Cost-Benefit Analysis: Comment," American Economic Review, American Economic Association, vol. 73(5), pages 1163-1170, December.
    5. Tibor Scitovsky, 1954. "Two Concepts of External Economies," Journal of Political Economy, University of Chicago Press, vol. 62, pages 143-143.
    6. Scotchmer, Suzanne, 1986. "Local public goods in an equilibrium : How pecuniarv externalities matter," Regional Science and Urban Economics, Elsevier, vol. 16(4), pages 463-481, November.
    7. Lee Hsien Loong & Richard Zeckhauser, 1982. "Pecuniary Externalities Do Matter When Contingent Claims Markets are Incomplete," The Quarterly Journal of Economics, Oxford University Press, vol. 97(1), pages 171-179.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Technical Change; Pecuniary Externality; Market Failure;

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • O - Economic Development, Innovation, Technological Change, and Growth
    • P - Economic Systems

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpge:9609001. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA). General contact details of provider: https://econwpa.ub.uni-muenchen.de .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.