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Category Archives: market failure

Is the “invisible hand” still relevant?

Adam Smith first talked about the invisible hand in the Wealth of Nations, expressing the view that by and large, competitive markets that are relatively free of government guidance do a better job of allocating resources than occurs when governments play a dominant role. Stephen LeRoy, professor at the University of California, opens with this well-known economic premise in his … Continue reading

Posted by Nigel Tree | Leave a comment

Should there be minimum prices set on alcohol?

The House of Commons Health Committee has just called for minimum prices to be set on alcoholic drinks. They are concerned at the negative external costs which the use of alcohol generates, and suggest that a minimum price of 50p per unit of alcohol could save about 3000 lives a year. They estimate that the total cost of the misuse … Continue reading

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Construction firms collude to rig bids for contracts

The Office of Fair Trading (OFT) has just announced the imposition of £129.5 million in fines on 103 construction companies in England, which it found had colluded with competitors on building contracts.   The OFT concluded that the firms engaged in illegal anti-competitive bid-rigging activities in a total of 199 tenders between 2000 and 2006. The process was mainly carried … Continue reading

Posted by Nigel Tree | Leave a comment