International Review of Waste Management Policy - Department of ...

3.3 Market Failure
Currently in Ireland waste management follows a free market structure. Institutional
economists argue that no markets are free and all markets are structured by the
state and other bodies. The institutions form the basis of a market. Institutions in this
sense are rules and norms which form the area in which the actors compete. 76 In
Ireland competition has been left relatively unregulated. However, it is important that
the institutions are designed with careful consideration for the long term aims of
waste management.
Warner, noting that some services should be considered natural monopolies,
identifies waste as one such service. 77 Currently waste policies have not been
developed to treat waste as a natural monopoly. There is a divergence between
individual preferences and public preferences which manifest themselves in low
service coverage, issues of illegal dumping and burning (which the collectors do not
have to consider in their private calculus), and a reduced quality of service at a given
price (reflecting the failure to capitalise on economies of density). Ironically, the
private sector market for the provision of treatment infrastructure is effectively
constrained by its ability to develop bankable propositions in the absence of security
of supply of waste for subsequent treatment.
An issue which has emerged as a result of the set of institutions that are in place is
the prospect of market failure. Market failure indicates that the assumptions made
about the market are incorrect and that one party is being made better off at the
expense of the other party i.e. the market is no longer efficient in the Pareto sense.
Some possible market failures are indicated in Table 3-1.
76 See, for example, Daniel W. Bromley (1989) Economic Interests and Institutions: The Conceptual
Foundations of Public Policy, Oxford: Basil Blackwell.
77 M. Warner (2008) Reversing privatization, rebalancing government reform: Markets, deliberation
and planning, Policy and Society 27, pp 163–174
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International Review of Waste Policy: Annexes