Government, Public Policy, and Sustainable Business
Read this chapter to find out more about the interplay between individuals, organizations, and governments in shaping public policy.
How are policies influenced? What factors affect the policy-making process? How does public policy affect innovation and sustainability practices?
3.3 Market Failures and the Role of Public Policy
Key Takeaways
- Market failures can justify government intervention.
- Private market failures related to sustainable business that government tries to address are externalities.
- Market failure correction efforts are the most relevant justifications for public policies that address sustainability.
- The absence of property rights for the atmosphere and environmental resources leads to externalities and market failures. While property right assignment to a public authority can help to restrict use and overcome the absence of property rights and the market failure, it often comes with significant costs.