ABSTRACT
This chapter argues that the economic way of thinking provides useful tools for developing adoption policy that allocates limited resources wisely while, at the same time, taking into account the ethical problems in adoption. Using economics, the ethical issues are conceptualized as the “market failures” of imperfect information and positive externalities. A review of the history of adoption policy in the US shows that positive externalities in adoption can be effectively addressed using subsidies. In contrast, the history of implementation of the Hague Convention in the US shows that past approaches to address the problem of imperfect information have been so expensive that international adoptions have fallen instead of risen. The final section outlines how policymakers might use economics to continue to refine adoption policy.
