ECON 314 Lecture Notes - Lecture 3: Free Rider Problem, Economic Planning, Resource Mobilization
Document Summary
Chapter 11 - development policymaking and the roles of market, state, and civil society. Development planning: concepts and rational: the planning mystique. In the past, few doubted the importance and usefulness of national economic plans. Played a positive role at that time, but proved to be ineffective. Has strict rules of how companies spend their money/receive it: washington consensus of the world bank. Too costly to restrict control: coordination failure: agents are better off without coordinating their actions in the short run for private gain; but worse off in the long run. Better off with coordination in the long- run. Market failure: market failures can occur when social costs or benefits differ from private costs or benefits of firms or consumers, market power (monopolistic, monopsonistic, monopsony: i. e. canadian government is the only provider of health care, Amazon is the only big buyer of selling online. 1, 1 (optimal outcome, but need trust/lack of selfishness)
