Market failure, inequality and redistribution

Jean-Marie Dufour ()

Ethics and Economics, 2008, vol. 6, issue 1, 9

Abstract: We consider the following question: does market failure justify redistribution? We argue that the general answer to this question is no, in the sense that policies for correcting market failures do not aim at producing a "desirable" income distribution. This follows from the fact that, by construction, market failure is a deviation from "efficiency" that does not involve any notion of a desirable distribution of welfare (or income). However, there are special cases where a "corrective measure" involving redistribution can offset a market failure, so this can provide a form of efficiency-based justification for redistribution.

Keywords: positive economics; normative economics; welfare economics; market failure; externality; taxation; social choice; public choice. (search for similar items in EconPapers)
JEL-codes: A10 (search for similar items in EconPapers)
Date: 2008
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