Monday, January 09, 2006

The agency problem

When Paul Marks wondered why the stock in bookshops has a left-wing bias, Tim Worstall suggested a form of market failure known as the agency problem.

In this case it might be that the interests of employees do not line up perfectly with the profit-maximising interests of the company itself, so they may not choose to stock exactly the books which the market might demand.

More about the agency problem.


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