In the response accessible at http://misr.mak.ac.ug/news/mamdanis-response-20th-annual-joseph-mubiru-lecture-bank-uganda-prof-joseph-stiglitz you will read the following lines on the 'economics of information':
Here then is my second question: Why call this “market failure”? The term “market failure” suggests that markets normally function properly and that “market failure” is an exceptional occurrence. It is an appropriate term to describe the thought of pre-Stiglitz economists who focused on externalities like pollution to call for government intervention in select fields. But it hides the real significance of Professor Stiglitz‖s contribution which is to redirect our thinking away from failure as an exceptional occurrence to imperfection as the normal state of markets. Like its twin term “state failure,” the term “market failure” focuses our attention on the exception rather than the norm. But we are not talking of an occasional lapse in how markets function; rather, we are talking of the regular state of markets, of how imperfect markets are when they function the way they are supposed to function. Information is always imperfect and so are markets. What is involved here is a methodological shift from the exception to the norm. This is a shift of paradigmatic significance. “Market failure” is an unfortunate term because it hides the fundamental character of this shift.
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Address: 41 Banks Street # 1, Cambridge, MA 02138 USA
Cellphone: US = +1 (857) 413 - 9521/TZ = +255754771763
Skype: chambi100
Twitter: @Udadisi
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