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Since many interverventions and regulations are driven by the same by market partecipants, I find too strong subdivisions between market and government rather ideological. Much more interesting to see how istitutions develop by themselves.
Ex.: "licensing" was present even in the middle age when there were no such things like modern state nations. Many times, the necessity to reduce asymmetric informations jointed with the desire to reduce competition, gave life to regulations which act as a barriers for newcomers and were even self-enforced even in the absence of a goverment (in the modern sense of the word). Better said: there is a degree of political action which is endogenous to the market process.

It was pretty great...but there's room for improvement. For example, you could have mentioned the preference revelation problem...

http://en.wikipedia.org/wiki/Preference_revelation

Here's my blog entry with numerous passages on the subject...

http://pragmatarianism.blogspot.com/2013/03/the-preference-revelation-problem.html

You certainly described the problem in your essay...the cause (lack of information) and the effect (inefficient allocation)...but I think it would really have helped if you had actually used the term "preference revelation problem". Using the appropriate label gives readers something for them to google to learn more.

I think every econ undergraduate is familiar with the free-rider problem...but how many are familiar with the preference revelation problem? Not enough. I only just recently created the Wikipedia entry for the preference revelation problem. On the other hand, the entry for the free-rider problem was created in 2002.

Speaking of the free-rider problem...I also recently created the Wikipedia entry for the forced rider problem...

http://en.wikipedia.org/wiki/Forced_rider_(economics)

...but some idiots butchered it. They removed the content that discussed the preference revelation problem because they failed to see how the two concepts are related...

http://en.wikipedia.org/wiki/Talk:Forced_rider_(economics)#See_also_items_removed

Now I'm indefinitely banned from Wikipedia. Speaking of places that I'm banned from...since I'm banned from the Bleeding Heart Libertarian website I posted my argument against government marriage here...

http://www.debatepolitics.com/economics/155990-should-marriage-within-scope-government.html

In a tax choice system you'd certainly have the opportunity to use your own taxes to help keep the government in the marriage business. The question is...how much of your own taxes would you spend on government marriage? Ah yes, the preference revelation problem. Perhaps you would find that there were far more important public goods to spend your taxes on? Maybe not?

Yeah, I can't for the life of me imagine why you've been banned at multiple places....

Hehe. It sounds like you have a theory! Why not share it? I'd really love to hear it. Does it reflect all the evidence? Here are the places where I've been banned from...

Crooked Timber Liberals:
http://pragmatarianism.blogspot.com/2011/12/crooked-timber-liberals-monopolizing.html

EconLog: http://pragmatarianism.blogspot.com/2012/05/eject-vs-exit.html

BHL: http://pragmatarianism.blogspot.com/2012/02/fallibilism-vs-fairness.html

Wikipedia: http://en.wikipedia.org/wiki/User_talk:Xerographica#Nomination_of_Club_theory_for_deletion

Please don't pull any punches with your theory. I can handle criticism with the best of them.

Does your theory explain why you and Boettke haven't banned me? Let me guess...

"To be a libertarian is to love liberty first and foremost. The State is certainly the major obstacle to our freedom, but it is not the only one. The more we talk about loving liberty, the more we will recognize impediments to liberty in all of their forms, and the more likely we are to persuade others who claim to love liberty but perhaps don’t see all its implications."

It's kinda funny because you actually "unbanned" me once. Remember?
http://www.coordinationproblem.org/2012/02/administrivia-comment-issues.html

When Crooked Timber formally blocked me somehow I was automatically blocked from all Wordpress blogs. I thought that perhaps you guys had blocked me as well when my comment didn't show up on this entry...
http://www.coordinationproblem.org/2012/02/order-defined-in-the-process-of-its-emergence.html

...so I continued the discussion in a thread that I started over at Mises. Unfortunately it appears that Mises nuked all its old forum discussions. Ugh. What a shame...that discussion was really quite excellent.

Speaking of excellent discussions...did you ever read my discussion with John Holbo?

http://pragmatarianism.blogspot.com/2012/01/crooked-timber-liberals-do-not-advocate.html

That was certainly a productive exchange. What's interesting to note is that that discussion took place after I was informally banned from the Crooked Timber website. If I had heeded the request to "go away" then John Holbo and I never would have exchanged perspectives with each other. It was actually that exchange which prompted Crooked Timber to formally block me from commenting on their website.

Progress certainly depends on facilitating, rather than limiting, exchanges. My theory is that precious few people grasp/appreciate/understand this fundamentally important concept.

So what's your theory? Personally I'd much prefer to discuss the preference revelation problem...but if you want to exchange perspectives on why I've been banned from so many places...then that's also a pretty interesting topic! We'd certainly have to bring up J.S. Mill...he wrote the definitive book on the value of tolerance. We both love Mill so that should be pretty enjoyable.

To what desgree is the idea of "market failure" a product of the fact that there will always be a wide gap between equilibrium models of economists and the far-from-equilibrium reality of the market economy? When we create bipolar feedback models that result in far-from-equlibrium creativity, we see market solutions, not failures.

In other words, Troy, as Art and I say in the piece: "Note that externality problems are market "failures" only in comparison to the perfectly competitive model's equilibrium. In other words, the "failure" here is not that markets "do not work" in practice, but that they fail to live up to a blackboard ideal. As it turns out, by that criterion, markets "fail" all the time! No actual market is ever in perfectly competitive equilibrium, not even the commodity markets we sometimes point to in introductory courses."

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