Date of Original Version
Abstract or Description
The American economy currently produces a gross national product in excess of $1000 billion and is growing,at about 4% per year. The market is remarkable for what it manages to do. There are some areas where the market has failed, but by and large, few people would consider doing away with the market because of these failures. In 1977, when the full impact of the air pollution abatement laws are felt, we will be spending less than 1% of GNP to abate air pollution.
There are two courses of action when a market failure has been identified. The first is to leave it alone; we probably choose this alternative too rarely. The second is for the government to intervene by changing the legal and institutional structure which allowed the failure to occur or by creating a regulatory commission to manage the problem directly. We tend to underestimate the cost of government intervention in the market. The cost is very substantial and intervention should take place only for serious market failures.
American Institute of Chemical Engineers Symposium Series, American Institute of Chemical Engineers, 47-53.