A recent article published by Emilie Besson highlights various market failures brought by the pandemic and emphasizes questions about the government’s role in addressing these problems. Although “panic buying” — the purchase and hoarding of goods in anticipation of future shortages — was a larger phenomenon in the earlier stages of the pandemic, this trend still exists. In order to ensure lower income citizens have access to food and health items that are subject to panic buying, some stores are rationing these items and adjusting store hours so needier individuals can afford and access these goods. This policy highlights debates over the government’s role in countering a classic problem with markets: income inequality. While it is not the government who has instituted these policies, it is possible that the government will step in to mandate such policies on a federal level. Although rationing these goods for poorer individuals appears noble, many may complain that it would be more efficient for the market to solve this issue on its own, without the help of the government.
Another potential market failure caused by the pandemic is the asymmetry of information (information failures) brought by false medical products. In recent months, there have been a surge in counterfeit face masks and surgical gloves. While it may not be easy for the government to address this problem, the government’s role in helping correct this market failure would likely be less controversial than policies regarding income distribution. The government needs to find a way to require every company — even online providers — to demonstrate the validity of their products. This is undoubtedly a situation where the consumer cannot afford the expense of an information failure.
2 comments:
I found your article very interesting, especially as it relates to the topics we have been discussing during our class sessions. Now, I think that these trends (hoarding, the spread of false information, etc.) are inevitable and are bound to happen as long as we stay in this global pandemic. The question now stands in the role of government when it comes to stepping up to correct problems of market failures. Most can argue that the government's actions (if there are any) will not actually be focused on the greater good of those facing income inequalities and affected by these issues but rather that their priority would be fixing those problems so that the market can remain efficient and so that these goods and services are allocated in a way that is conducive to good economic performance. This goes back to one of the most criticized aspects of market economies, the lack of oftentimes equity.
I have noticed that when COVID first started there was the big panic buy and there would be zero toilet paper left in the isle. I though the whole panic buying thing was over when I saw shelves were considerable full when I would go shopping, but recently I have noticed shelves were starting to get more bare. Are people fearing a second wave of COVID? On another note I think that it is important to ration the goods because otherwise people will take them all for themselves and others will get none which is very unnecessary even if it may be more efficient.
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