The market failures of Palestinian natural resources

Abstract

In Palestine as other countries in the world environment is not considered in policy appraisal stems from the fact that environmental goods and services are not marketed and therefore do not have prices that can be comparable with development costs and benefits. The dominant economic theory maintains that free and perfectly competitive markets will lead to optimal allocation of resources, including environmental goods and services, or to economic efficiency. Market failures are defined as those circumstances that prevent the perfect competition, and therefore economic efficiency, from being achieved. This paper discusses the major sources of market failures related to natural resources, which are the externalities; the public goods; the property rights; the ignorance and uncertainty; the short-sightedness; and the irreversibility, and tries to give some examples of the existence of these reasons in Palestine, and how to overcome them