INTL DV 130 Lecture Notes - Coase Theorem, Market Failure, Business Cycle
20 Aug 2013
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Document Summary
Tried to illustrate the change from the guild system of production to. Factory system of production (industrial revolution: the pin factory metaphor gave smith the opportunity to hone in on that huge macro transformation. Dealing out a very specific example to then apply to broader contexts. Arrival of factory system in the national economy and taking over of guild system. The wealth of nations was written to show that the factory system was a) more efficient, and b) more moral. Not necessarily agreeing with smith, but he has had a huge influence in the way economists approach the developing world. If you can devise a market-based solution, you want to complete the action at minimal cost to society, so extra resources can be diverted to addressing another need. Coase theorem: the market-based solution: assigning property rights. Gets rid of need to create vast bureaucracy.
