The Fable of the Bees: An Economic Investigation

EVER since A. C. Pigou wrote his books on "welfare,"' a divergence between private and social costs has provided the main argument for instituting government action to correct allegedly inefficient market activities. The analysis in such cases has been designed less to aid our understanding of how the economic system operates than to find flaws in it to justify policy recommendations. Both to illustrate the argument and to demonstrate the nature of the actual situation, the quest has been for real-world examples of such defects.