The Theory of Market Failure and Equity-Based Policy Making in Contemporary Local Government

Over the past several decades local government has become increasingly complex. Accordingly, local government policy makers can no longer simply rely on intuitive reasoning in the formulation of policy and are now obliged to draw on conceptual frameworks developed in the social sciences, including economics. One such framework is the market failure paradigm which has previously focused exclusively on the question of economic efficiency and local public goods in its application to the local government milieu. This article seeks to extend this model to include sources of market failure which derive from questions of equity as well as efficiency.