Proceedings of the New York State Economics Association


How Nonmarket Participants Cause Market Failures: A Conceptual Perspective

L. Chudi Ikwueze

vol. 5, October 2012, p. 82-91


Existing theories of market failure hinge on the premise that only market participants can cause a market failure, implying thereby that nonmarket participants cannot. Nonmarket participants are individuals, businesses, and governments that engage in any activities outside a market transaction; such activities include charity giving, Internet hacking, and corporate lobbying. The goal of this paper is to show that nonmarket participants can cause a market failure. It first explores the theoretical basis of nonmarket participants as a source of market failure. Then the paper estimates the effects of lobbying and Internet hacking on the U.S. banking and e-commerce sectors.


suggested citation:

L. Chudi Ikwueze. "How Nonmarket Participants Cause Market Failures: A Conceptual Perspective." Proceedings of the New York State Economics Association. vol. 5, October 2012, p. 82-91

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