The concept of market failure was originally presented by economists as a normative explanation of why the need for government expenditures might arise. Gradually, the concept has taken on the form of a full-scale diagnostic tool frequently employed by policy analysts to determine the exact...

This paper argues that the consistent application of benefit-cost analysis (BCA) is likely to enhance the well-being of all. Thus, the justification for its use in policy making lies directly in the Pareto test. The Pareto justification stems from a decision-rule perspective across a portfolio...