Market Failure

A market’s inability to create maximum efficiency, by not properly providing goods or services to consumers, not efficiently organizing production, or not serving the public interest. The term does not refer to the collapse or demise of a market, but instead to the unintended and unwanted consequences of decisions made by economic actors. A variety of elements can cause market failures including:

  • Abusive market power, such as monopolies
  • Negative externalities, or costs paid by third parties or the general public, often in the form of pollution and environmental or social degradation
  • Inadequate production of public goods
  • Incomplete or false information, such as misleading and erroneous advertising, and asymmetric information, such as insider trading


One Response to “Market Failure”
  1. Michael says:

    Well lets see:
    1. abusive power and monopolies can only be created with government consent and intervention
    2. negative externalities are not negative unless they harm another individual, and if so then by harming atleast another person or their property they are liable.
    3. Inadequate production of public goods cannot happen unless the government compels a market to underproduce, if there is a need there will be someone who wishes to make a buck there to compete.
    4.) false information etc. is fraud and thus the government has a proper role to play as with fraud another individual is being harmed.

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