The Political Market in the Framework of Market Failure Theory: An Analytical Approach

Abstract

The political market is a mechanism as like the traditional economic market in which the players act within the framework of the utility function, the exchange process and formed market strategies. Although the economic necessity of political markets is obvious, it should be called an economic market in terms of the effect it has on social welfare. The effectiveness of the political market depends on whether it has the characteristics of a perfectly competitive market. A perfectly competitive market refers to a market of goods and services with the lowest possible price and the lowest cost, from which the players in the market benefit from. However, when the market mechanism has difficulties in providing an optimal level of resource allocation in the current system, it begins to lose its perfectly competitive market feature and loses its effectiveness in economic terms. Since the market mechanism cannot balanced naturally itself, it needs legal regulations that called as non-market intervention and that have economic consequences, in order to regulate the market functions. The main purpose of this study is to reveal the economic market nature of the concept of political market. The political market is explained theoretically through the theory of market failures and the political market mechanism revealed based upon the conventional market logic.