Which work argues for urgent action and strong government intervention due to market failures?

Which work argues for urgent action and strong government intervention due to market failures?

• A. Farmer 2015
• B. Stern 2018
• C. Gruber 2011
• D. Berkes 2000

Answer: (B)

Markets fail to price the full costs of greenhouse gas emissions, and climate stability functions as a global public good. Information gaps and the way we discount future damages further distort incentives, so leaving things to the market won’t deliver an optimal outcome. The argument here is that these market failures create a strong justification for urgent government action to set the right incentives and reduce risk now. Stern contends that we must act quickly with robust policy tools—carbon pricing, firm emissions standards, and substantial public investment in clean technologies and adaptation—because delaying action only increases expected damages and raises the chance of severe economic and environmental costs. This proactive, government-led approach is presented as the rational response to climate-related market failures. Other readings touch on related topics like agricultural practice, policy design, or community management, but they don’t emphasize the same imperative for immediate, large-scale intervention to correct those market failures, making Stern the best fit for this question.

Markets fail to price the full costs of greenhouse gas emissions, and climate stability functions as a global public good. Information gaps and the way we discount future damages further distort incentives, so leaving things to the market won’t deliver an optimal outcome. The argument here is that these market failures create a strong justification for urgent government action to set the right incentives and reduce risk now. Stern contends that we must act quickly with robust policy tools—carbon pricing, firm emissions standards, and substantial public investment in clean technologies and adaptation—because delaying action only increases expected damages and raises the chance of severe economic and environmental costs. This proactive, government-led approach is presented as the rational response to climate-related market failures. Other readings touch on related topics like agricultural practice, policy design, or community management, but they don’t emphasize the same imperative for immediate, large-scale intervention to correct those market failures, making Stern the best fit for this question.