Bruno S. Frey I Joseph E. Stiglitz o Zawodności Państwa i Zawodności Rynku
Bruno S. Frey and Joseph E. Stiglitz about Government Failure and Market Failure

Summary/Abstract: One of the most fascinating economic issues is the effectiveness of the operating of resources allocation mechanisms. During 250 years, mercantilists were favouring a nation; later Adam Smith convincingly substantiated, that only the market mechanism enables nations to achieve prosperity, however John Maynard Keynes postulated – during the Great Depression – a state intervention in economy. New more sublime arguments have appeared on the issue of market failure and government failure. Several years ago, Joseph E. Stiglitz and Bruno S. Frey suggested an interesting solution to this problem. They maintain that it disappoints government, as well as the market. Stiglitz claims that the state should intervene only in cases when it has the ability to reduce market failure. He postulates government and market co-operation, which can result in their reinforcement and effective solutions for social problems. However, Frey notices that only a powerful nation is able to make rules for an economic game, which enable private markets to operate well. Each time, comparative analysis of costs and profits of market and state operating should make a decision which enables allocation mechanisms to choose.

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