Market failure

Kautilya’s Arthashastra

Adam Smith’s Wealth of nations

Monopolies and monopsonies

(p. 236) stated, “Merchants are all thieves, in effect, if not in name; they shall be prevented from oppressing the people (4.1).” He (p. 134) added, “It is the frontier officer who promotes trade, whereas traders form cartels in order to raise prices [for the goods they sell] or lower them [for the goods they buy]; they are profiteers making one hundred panas on one pana or one hundred measures on one measure of [grain].”

(Book 1, Ch. XI, p. 278) wrote, “It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”

Regulation of monopolies and monopsonies

Kautilya (p. 250) recommended, “Cartelisation by artisans and craftsmen with the aim of lowering quality, increasing the profits or obstructing the sale or purchase and by merchants conspiring to hoard with the aim of selling at a higher price (4.2)” would be dealt with stiff punishments of 1000 panas for such offenses. Such a high penalty indicates the perceived seriousness of the offense. He (pp 249.250) recommended punishment for “adulteration”, “fraud”, “false description in selling”, “showing one product and selling another”, and “stealing precious metal in making new objects”, etc. (4.2).

Nothing specific