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Ekonomia i Prawo. Economics and Law

The institutional dimension of market failure
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The institutional dimension of market failure

Authors

  • Wojciech Giza Cracow University of Economics http://orcid.org/0000-0002-6773-1372

DOI:

https://doi.org/10.12775/EiP.2019.001

Keywords

market failure, institutional economics, neoclassical economics

Abstract

Motivation: At the turn of the 19th and 20th centuries, institutionalism was presented by T. Veblen as an alternative to neoclassical economics. On the basis of neoclassical economics, in addition to the explanation how an effectively functioning market leads to maximization of welfare, we also find a market failure analysis. The main theme of the presented study is an attempt to synthesize these concepts, in particular to show how the institutional approach modifies the perception of the market failure.

Aim: The aim of the article is to analyze the market failure on the basis of institutional economics. In addition, an attempt was made to determine how institutional solutions can result in limiting certain types of market failure.

Results: In the light of the analysis carried out, the analysis of market failure based on Veblen’s institutionalism is not justified. However, the relation between the New Institutional Economics and the neoclassical interpretation of market failure can be noticed, mainly, when it comes to explaining the reasons for the existence of markets and the methods used to counteract external effects.

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Ekonomia i Prawo. Economics and Law

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Published

2019-03-31

How to Cite

1.
GIZA, Wojciech. The institutional dimension of market failure. Ekonomia i Prawo. Economics and Law. Online. 31 March 2019. Vol. 18, no. 1, pp. 5-15. [Accessed 6 July 2025]. DOI 10.12775/EiP.2019.001.
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