Question

What does Joseph Heath mean when he calls his approach to business the market failures approach? How is it different than other approaches?

Answer 1

When Jospeh Health call his approach to business he means operating a type of business where market does not reach to equilibrium due to some factor which has not been address like externality, asymmetric information, public good, monopoly. This is different from other approaches because in other approaches resources can be efficiently allocated as per the prices so has no breakdown in system, i.e. in other approaches allocative efficiency comes with price mechanism.