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Title: Social Costs: Where Does the Market End?
Authors: Neves, Vítor 
Keywords: Social costs; Externalities; Market failures; Market; Efficiency; Social value
Issue Date: Oct-2012
Publisher: Centro de Estudos Sociais
Serial title, monograph or event: RCCS Annual Review
Issue: 4
Place of publication or event: Coimbra
Abstract: The markets are a powerful economic coordination mechanism. Even so, their limitations cannot, and should not, be ignored. The wide range of costs originating from business activities within the framework of capitalism and subsequently externalised or, more accurately, transferred to other agents or to society as a whole with no repercussions on the price mechanism, is one particularly striking example of these limitations. This article contrasts the different concepts of social costs existing in economics literature, ranging from the identification of the problem as a “market failure” to the more heterodox (and less well-known) concept of K. William Kapp, according to whom social costs are an intrinsic and inevitable problem within the institutional context of capitalism. The nature of the problem is discussed initially, followed by a presentation, albeit brief, of two fundamental fault lines separating the prevailing conventional approach and Kapp’s heterodox one: the concept of efficiency adopted and the way in which the question of valuation of social costs is viewed.
ISSN: 1647-3175
Other Identifiers: 10.4000/rccsar.443
DOI: 10.4000/rccsar.443
Rights: openAccess
Appears in Collections:I&D CES - Artigos em Revistas Nacionais

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