Market Failure In Prisons

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There are various ways in which a market failure occurs. A product might be under produced or not even produced at all and when this happens, their resources have been under allocated to the production of that product. If the opposite occurs and a product is over produced then its resources have been over allocated to its production. Market failure implies a loss of allocated efficiency. McConnell, Brue and Flynn define market failure in our text book as “the inability of a market to bring about the allocation of resources that best satisfies the wants of society; in particular, the over allocation or under allocation of resources to the production of a particular good or service because of externalizations or informational problems or…show more content…
Because these areas mainly fall under governmental provision and regulation they are simply not provided to society as a whole by the private market. Privatizing prisons has once again become acceptable, “the private prison industry, which has grown by 350 percent in the last 15 years (Johnson, 2012)”. There is still much to be debated about the privatization of prisons once again, as the profit margin isn’t in the care or service they provide but rather in the number of inmates they house. Emergency services such as Fire and Police protection are areas that the market fails to give the desired quality of output and desirable price. Both of these services are pretty much wholly government run and controlled. I did find a blog article that gave the following information which I think merits at least a look for those counties, cities and states struggling to pay the bills for these services: “Chatham County, Georgia, at the Southside Fire Department (SSFD), a privately run and subscription-funded fire, EMS, and security company began in 1961 with only $10,000 and a handful of entrepreneurial volunteer firemen who bought a fire truck and offered subscription-based fire protection to the residents of the then-unincorporated southern section of the county. Today, the SSFD has a budget of $10 million and provides fire…show more content…
(2012, October 17). The Perils of Prision Privatization. Retrieved Feb 9, 2013, from The Stanford Daily: http://www.stanforddaily.com/2012/10/17/the-perils-of-prison-privatization/ McConnell, C. R. (2012). Microeconomics. Boston: McGraw Hill. Melchiorre, I. M. (2011, July 15). Time to Re-Priatize Fire Departments. Retrieved February 10, 2013, from The American Spectator:

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