Private decision-making often involves trial and error, with competition among different approaches determining the outcome. This process influences which products succeed, market shares, resource allocations, and the survival of new products. Innovation often occurs through experimentation and persistence, rather than pre-determined strategies. The example of the Wright brothers illustrates how product innovation is a result of trying various methods until one proves successful.
Economics students are often taught that government should intervene when there is market failure. But what about government failure? Should we expect government intervention to outperform market outcomes? Listen as Duke University economist Michael Munger explores the history of how economists have thought about this dilemma and possible ways to find a third or even fourth option beyond government or markets.