ABSTRACT
Kenneth Arrow [1979/84, p. 216] I contend that market failure is a more general category than externality...
Current writing has helped bring out the point that market failure is not absolute; it is better to consider a broader category, that of transaction costs, which in general impede and in particular cases completely block the formation of markets. It is usually though not always emphasized that transaction costs are costs of running the economic system…
Kenneth Arrow [1969/83, p. 134] transaction cost economizing figures prominently in explaining … major features of the business environment.
