Famous Fables of Economics critiques some of our most cherished stories of market failure. Economists have used these colorful myths to justify a wide range of public policy interventions in the economy: public provision of goods and services, economic regulation of industry and antitrust actions against major corporations. Despite their blatant factual inaccuracies, the appeal of these fables to economic, law, and management academics continues undiminished - the fables are persistently repeated in countless classrooms, textbooks, and academic seminars. Among the fables critiqued here are the lighthouse, the keyboard, the bees and the orchard, General Motors' acquisition of Fisher Body, the Liberty Ships and the learning curve, predatory pricing and tulip mania. This provocative book explores the mythical nature of some of economists' favorite stories and raises fundamental questions about the role of the government in society. It provides an intriguing look at economic thought that is accessible to general readers, students, professionals, and academics.
These articles suggest that economic analysis of market efficiency should rely on systematic study of institutions and transaction costs rather than on casual anecdotes.