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Friday, August 21, 2015

'The Water Market Will Never be a Free Market'

John Whitehead responds to those who say the solution to water problems is to "allow free markets to operate":

...The water market will never be a "free market" in the true sense of the word. A plea to the water authority (i.e., government) to price water more rationally is a plea for policy reform ... towards a better use of incentives. Free markets only exist when there is no government regulation of buyers and sellers, no taxes, no subsidies and no nothing. An efficient free market for water is a difficult thing to pull off since it is a common-pool resource. It is easier for the pizza market to operate efficiently since pizza is a private good. 
I don't think adaption to climate change can be accomplished efficiently by government taking a hands off approach. You can't privatize much of the natural environment. ...

    Posted by on Friday, August 21, 2015 at 10:06 AM in Economics, Environment, Market Failure | Permalink  Comments (33)


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