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4 - Failure

Published online by Cambridge University Press:  23 July 2021

Amy Whitaker
Affiliation:
New York University
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Summary

If the logic of markets is that price equals value, sometimes there are forms of value that fall outside of what markets are able to recognize. We call this phenomenon market failure. It is not a personal or institutional failure or even a failure of economic theory, just a limitation of markets as a medium. Our core case study is of the opening of Tate Modern. The museum revitalized the Southwark area of London and increased property values sometimes 500%. The museum relied on philanthropy and government support and was not able to capture all of the value it created. We consider two very different methods economists use to evaluate these situations: contingent valuation method and economic development study. We compare and contrast the approaches taken by the Guggenheim and the Tate. We explore concepts of market failure including public goods, externalities, tragedy of the commons, free-rider problems, adverse selection, and moral hazard.

Type
Chapter
Information
Economics of Visual Art
Market Practice and Market Resistance
, pp. 102 - 128
Publisher: Cambridge University Press
Print publication year: 2021

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  • Failure
  • Amy Whitaker, New York University
  • Book: Economics of Visual Art
  • Online publication: 23 July 2021
  • Chapter DOI: https://doi.org/10.1017/9781108649919.006
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  • Failure
  • Amy Whitaker, New York University
  • Book: Economics of Visual Art
  • Online publication: 23 July 2021
  • Chapter DOI: https://doi.org/10.1017/9781108649919.006
Available formats
×

Send book to Google Drive

To send content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about sending content to Google Drive.

  • Failure
  • Amy Whitaker, New York University
  • Book: Economics of Visual Art
  • Online publication: 23 July 2021
  • Chapter DOI: https://doi.org/10.1017/9781108649919.006
Available formats
×