On obnoxious markets

Certain markets evoke popular discomfort, distrust and even outrage. Trade in arms, drugs, toxic waste, child labor and body parts, for example, elicits these reactions to different degrees. This paper asks 'what is it about some markets that brings about these responses?'

The article finds three key parameters (extremity, agency and inequality) which have a bearing on our intuitive reactions and serve to differentiate markets:

• as the likely outcomes of a market become more extreme , the agent who acts in the market is more distant from the agents who bear the consequences of those actions
• the greater the degree of inequality in market relations, the more likely it is that the operation of the market will provoke discomfort
• when outcomes are potentially extreme, agency is minimal and market relations are highly unequal, the market in question may deserve the label “obnoxious”
• it is not obvious that the best or only answer to an obnoxious market is to attempt to ban it
• while judicious regulation remains an important tool, a complementary approach is to address the underlying issues directly (extremity through safety nets, agency through information, and inequality through redistribution)