To ask the Secretary of State for Digital, Culture, Media and Sport, what criterion must be met for his Department to accept market failure in DCMS sectors.
22 January 2021
When appraising proposals for policies, programmes, and projects, DCMS relies on central government guidance on appraisal and evaluation, from the Treasury’s Green Book.
The Green Book is based upon the ideas of welfare economics and concerns the optimisation of social welfare. Much of its subject matter therefore concerns estimation of public, that is social, welfare values. These are values that economic markets are either unable to fully capture, or are unable to register at all. The various forms of shortfall in market welfare optimisation are characterised as “market failures.”
There is no single form of criterion to accept or address market failure. This will depend on the type of market failure, the evidence around its existence or severity, and the results of the Social Cost Benefit Analysis for potential interventions.