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The effect of market failure on the British motor industry before 1939

Authors
Journal
Explorations in Economic History
0014-4983
Publisher
Elsevier
Publication Date
Volume
18
Issue
3
Identifiers
DOI: 10.1016/0014-4983(81)90013-9
Disciplines
  • Economics

Abstract

Abstract British industrial structure has played a central role in historical accounts of British economic performance in the 20th century, and the motor industry has occupied a prominent place in these narratives. This paper formulates a neoclassical model of market failure and applies the model to an evaluation of the size of the motor industry before 1939. The main sources of possible market failure studied are the method of road finance, unemployment, monopolistic behavior, economies of scale, and protection from foreign competition. It is concluded that devoting a larger proportion of national resources to the motor industry could probably have raised national income and welfare throughout the period studied.

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