Writing assignment – Market Failure
Due date: end of March
Length: somewhere around 2000 words or 8-10 double spaced pages, with graphs
and tables as needed.
Topic: Market failure
We’ve looked at two types of market failures, Public Goods and Externalities. The
Appendix to chapter four also considers a third type of failure stemming from
information issues, such as Moral Hazard and Adverse Selection. Later in the term
we will look at how market power in the form of imperfect market structures,
such as Monopoly and Monopsony can lead to market failure.
For this assignment I want you to consider one of these. Begin by explaining it in
theoretical terms, and then find and describe a real-world example of that type of
market failure. Then I want you to offer policy response(s) that might correct the
problem, again offering real-world examples of where such policies might have
been applied or at least debated. Real-world examples can be current or more
historical (some good examples from several decades back of measures to fix
negative pollution externalities for example).
The text is the obvious place to start, but I would like to see at least a couple
more sources. With respect to that, do try to be careful with the sources you use
– not everything you find on the internet is credible. Academic sources (like
journals or other things academics write-in), government agencies, think tanks
(though be careful there as well) will look better than some random person’s
blog. You should provide a bibliography and reference things within your paper
that should be referenced. I’m not fussy about style guides.
You’ll take the bulk of this from things others have written, but you should put
everything in your own words.