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What is Market Failures

Chapter 11
Handbook of Research on Entrepreneurship, Innovation, and Internationalization
They occur when freely-functioning markets fail to deliver an efficient allocation of resources. The result is a loss of economic and social welfare. Market failure exists when the competitive outcome of markets is not efficient from the point of view of society as a whole. This is usually because the benefits that the free-market confers on individuals or businesses carrying out a particular activity diverge from the benefits to society as a whole. In the case of innovation, the existence of some sources of market failure as appropriability, financial restriction or high costs and uncertainty make that firms do not provide the level of innovation investment that it is socially optimal which justify, from an economic point of view, the government intervention to boost this type of activities in the market.
Published in Chapter:
Characterization of Companies Based on Willingness to Innovate and Competitiveness
Beatriz Corchuelo Martínez-Azúa (University of Extremadura, Spain) and Felipe Martín-Vegas (University of Extremadura, Spain)
Copyright: © 2019 |Pages: 27
DOI: 10.4018/978-1-5225-8479-7.ch011
Abstract
Companies, as agents of innovation systems, play a fundamental role in the innovative activity of economies. Nevertheless, the existence of barriers to innovation is becoming a low willingness to innovate by companies despite being an important element of competitiveness. These two perceptions are fundamental when deciding to innovate. It also influences the perception of government intervention to encourage innovation. The objective of this study is to analyze the characteristics of Extremaduran companies based on perceptions they have about these two variables: willingness to innovate and assessing innovation as an essential element of competitiveness. Data come from an ad hoc questionnaire focused mainly on variables related to innovation. Obtained results show four profiles of companies based on these characteristics and these results permit to connect them to perceived obstacles to innovation and demanded public policies. The characterization of the companies may be useful for public policies design to stimulate innovation.
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Chapter 16
Innovation in Extremadura: Opportunity for Companies or Obstacle for their Development?
They occur when freely-functioning markets fail to deliver an efficient allocation of resources. The result is a loss of economic and social welfare. Market failure exists when the competitive outcome of markets is not efficient from the point of view of society as a whole. This is usually because the benefits that the free-market confers on individuals or businesses carrying out a particular activity diverge from the benefits to society as a whole. In the case of innovation, the existence of some sources of market failure as appropriability, financial restriction or high costs and uncertainty make that firms do not provide the level of innovation investment that it is socially optimal which justify, from an economic point of view, the government intervention to boost this type of activities in the market.
Published in Chapter: Innovation in Extremadura: Opportunity for Companies or Obstacle for their Development?; From: Handbook of Research on Entrepreneurial Success and its Impact on Regional Development
Full Text Chapter Download: US $37.50 Add to Cart
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