Recuperating from Market Failure: Planning for Biodiversity and Technological Competitiveness

How appropriate is market-failure theory for today's policy-making concerns? In recent years, concepts drawn from the theory of market failure have been increasingly influential in public administration and policy analysis. Ernest Sternberg contends that this reliance on microeconomic theory is often misleading and harmful because it fails to observe the integrity that characterizes many of the objects about which policy makers are concerned. He takes two kinds of objects as examples: ecosystems (a central concern of environmental policy) and emerging bodies of technological knowledge (a fundamental concern in industrial competitiveness policy). When policy makers fail to see that an ecosystem and a technological paradigm each have integral features, they can unwittingly contribute to environmental or industrial deterioration.