Credit Constraints, Utilitarian Market Failure, and Social Enterprises

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• 研討會日期 : 2016-11-17
• 時間 : 14:30
• 主講人 : Professor Biung-Ghi Ju
• 主持人 : Professor Chun-Hsien Yeh
• 地點 : Conference Room C101
• 演講者簡介 : Professor Ju received his Ph.D. in Economics from University of Rochester in 2001. He is currently a Professor of Economics at Seoul National University. His research fields are Economic Theory, Social Choice Theory, Public Finance, Game Theory, and Mechanism Design.
• 演講摘要 : Credit constraints create a gap between marginal utilities concerning primary needs satisfaction between consumers with and without credit constraints. Larger marginal utilities of consumers who spend their entire incomes for primary needs satisfaction cannot be realized through market exchange. Thus markets fail to maximize utilitarian social welfare, which is referred to as utilitarian market failure in this paper. The purpose of this paper is to bring out utilitarian market failure and to analyze the roles of social enterprises and government support for their production of social values in the face of this market failure. Social enterprises have objective functions given by both profits and the social values they produce. Two types of social values are considered here; one is the social value created from the employment of marginalized or disadvantaged workers and the other is the social value created from the provision of primary needs goods or services for marginalized or disadvantaged consumers. We consider the Cournot oligopoly model and compares the social welfare of two cases, one with only for-prot enterprises and the other with for-prot and social enterprises. Comparing the two cases of the markets, we show that the market with social enterprises can attain greater utilitarian social welfare than the market with only for-prot enterprises and, to attain the greatest utilitarian social welfare, social enterprises should assign an optimal weight on social values in their decision making. We show that when the weight on social values is suboptimal, government subsidization for the production of social values can improve social welfare by increasing the suboptimal weight on social values toward an optimal level. In other words, the government subsidization provides higher incentive for social enterprises (and for-prot enterprises as well) to put greater weights on social values in making their market decisions.