ABSTRACT
The appropriate role of government in contemporary advanced industrial democracies is a complex and controversial issue that remains unsettled. A vast research effort has been devoted to resolving this issue. Social scientists, including anthropologists, economists, policy analysts, political scientists, public administration specialists, and sociologists, have devised numerous approaches to the study of the nature and role of government, with varying degrees of success. One of the more successful approaches to the analysis of the state has been developed by welfare economists in the form of the theory of market failure. In essence, the market failure paradigm examines the operation of the economy and prescribes government intervention when markets “fail” on the grounds of either economic efficiency or equity.
