15/10/2007 9:42:10 pm
Improving Markets. By allowing people to start businesses, produce and compete - and consumers to choose freely - markets are an extraordinary phenomenon. It is the main feature of the global economy, and during the last 200 years we have had markets, living standards have boomed.

They can, however, be distorted. To a large extent, the state distorts the market by interventions, which the responsible politicians later refer to as "market failures". But there may be a number of other distortions, such as lack of information. There is always a potential to improve how markets work.

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Leonid Hurwicz, Eric Maskin and Roger Myerson is interesting form this perspective. Their work has been dedicated to theories about how to optimize the functioning of markets.

This is relevant, not least when there are debates about privatizations. Their theories can be applied to make such reforms work better. Or about how to introduce markets in areas where the state still dominates in most OECD countries, such as health care.

Read more in the FT - >