You are here: IssuesEconomicImproving Free Markets

Improving Free Markets

Most criticism of free markets is based on the distortions caused when the conditions for free markets are clearly imperfect. These can typically include

  • collusion between key market participants,
  • incorrect or distorted information being supplied to market participants,
  • misalignments between the market's effective reach and the legal jurisdiction protection that market participants assume.

Government responses often include creation of a body that responds, generally after the event, to significant incidents arising from these imperfections. Would it not be worth trying a proactive approach? In particular let's try one that also targets addressing the fundamental issue of market participants' imperfect and incomplete information. This information assymmetry is directly contrary to the assumption behind any confidence that free markets deliver optimal outcomes.

How about the government competition/markets watchdog:

  1. Surveys market participants to assess their market information completeness, accuracy and balance
  2. When this is found wanting, acts to redress the information weaknesses through whatever means is efficent and effective for that market
  3. Funds the cost of this information service through an impost on either transactions in that market or on advertising by participants operating in that market
  4. Resurveys market participants to assess their post intervention market information completeness, accuracy and balance

What do you think? How would such an approach change be promoted?

Last Updated on Wednesday, 16 May 2012 00:42

Free business joomla templates