Faculty Publications

Famous Fables of Economics: Myths of Market Failures
Edited by Daniel F. Spulber

"This book is important for understanding how economic principles can be applied to real-world problems. Professor Spulber discusses nine important myths that are often cited in the economics profession. These myths have important lessons for a number of current policy issues such as the Microsoft case, the supposed superiority of Betamax over VHS, and the supposed current stock market bubble."

Jack Carr, University of Toronto

" Famous Fables of Economics is a welcome addition. Students will learn that fables and myths should not be accepted at face value. More importantly, they will see how economics can be used to challenge these myths. The book will prove useful in an array of courses, especially those that deal with policy issues."

Roger D. Blair, University of Florida

Famous Fables of Economics critiques some of our most cherished stories of market failure. Economists have used these colorful myths to justify a wide range of public policy interventions in the economy: provision of goods and services, economic regulation of industry, and antitrust actions against major corporations. Despite their blatant factual inaccuracies, the appeal of these fables to economic, law, and management academics continues undiminished - the fables are persistently repeated in countless classrooms, textbooks, and academic seminars.

Among the fables examined here are the lighthouse, the keyboard, the bees and the orchard, General Motors' acquisition of Fisher Body, the Liberty Ships and the learning curve, predatory pricing, and tulip mania. This provocative book explores the mythical nature of some of economists' favorite stories and raises fundamental questions about the role of the government in society. It provides an intriguing look at economic thought that is accessible to general readers, students, professionals, and academics. These articles suggest that economic analysis of market efficiency should rely on systematic study of institutions and transaction costs rather than on casual anecdotes.

Daniel F. Spulber is Elinor Hobbs Distinguished Professor of
International Business and Professor of Management Strategy at the Kellogg School of Management, Northwestern University, where he has taught since 1990. He is also Professor of Law at Northwestern University Law School.