Covering the social costs of market failure – the unsub of the value added

Abstract

The article presents some of the conclusions of a larger research project aiming at creating a map of the decisions on negative externalities in the regional development and collaborative governing framework. The present regional development models that are focused on the sustainable development (human sustainability, social sustainability, economic sustainability, environmental sustainability) represent the result of the mechanisms quantifying the negative externalities costs on the local authorities’ level. The negative externalities represent an assigning criterion based on the subsidiarity principle, especially with regard to the “beggar thy neighbor” policies, namely the environmental pollution, and this provision is in itself a reason for the national economies to act in case of negative externalities. The public decision on covering the negative externalities, taken in accordance with the economic approach of subsidiarity pertaining to the multilevel governance provides a balanced solution for all the interested parties – citizens, economic agents and the government (who are designing a map for covering the social costs raised by the negative externalities , which must be in accordance with both the national and European decisions, but, at the same time, suspending this map whenever it is in conflict with these decisions cannot be an answer, thus leaving the social costs uncovered).

Keywords

• regional development
• market failure
• public administration
• social costs