Market Frictions and Climate Change: Why the Marketplace Can’t Just Fix it

ABOUT US : Collapsed
INVESTMENT STRATEGIES : Collapsed
FINANCING SOLUTIONS : Collapsed
INSIGHTS : Collapsed

Market Frictions and Climate Change: Why the Marketplace Can’t Just Fix it

DOWNLOAD PDF
Tani Fukui
OCT 29, 2021

You may also like

Inflation: Housing, not Supply Chains

Technical Analysis Chart Pack: April 2021

Countless times a day, marketplaces provide good or even great solutions to the fundamental problem of matching supply and demand. When there’s a run on toilet paper, price changes and inventory shortages send urgent signals to manufacturers to make more toilet paper. And manufacturers respond, reducing their range of product offerings and running extra shifts. It can take some time, but the markets adjust—without intervention, without regulation.

But some goods, particularly those involving market frictions, have a much more indirect line between price and quantity signals and the means of production. Examples of products with market frictions include oil, which involves high and uncertain exploration costs, and street parking, which requires the conversion of an initially public good (space on the streets) into a paid-for commodity. Each of these—and many other scenarios—require policy adjustment in order to address a market failure.