Government Failures: Theory and Policy

Abstract

The article deals with the evolution of approaches to the problem of “government failures”. This trend of modern economic theory, which has arisen in opposition to the concepts of “market failures” can be seen as a search for a new strategy of political and economic analysis of the resource allocation mechanisms, as well as historical social institutions and their effect on the efficiency of economic processes. Special attention is paid to the problem of information retrieval, ways of funding the state, the impact of rent‑seeking behavior, the role of the political process, negative externalities as a result of the lack of coordination, and of the overall presence of the state in the economy. Interdisciplinary approach to “government failures” takes into account the influence of legal rules and institutions on the nature of allocation of public resources, as illustrated by the examples of modern Russian economy.