Market Failure

  • Created by: Glossy94
  • Created on: 06-05-15 10:23
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  • Market failures
    • Market failure occurs when the free market, left alone, fails to deliver an efficient allocation of resources. The result is a loss of economic and social welfare.
    • Markets fail because:
      • 1. Negative externalities(e.g. effects of pollution).
      • 2. Positive externalities (e.g. the provision of education)
      • 3.Imperfect information.
      • 4. The private sector in free markets being unable to supply public goods.
      • 5. Market dominance by monopolicies can lead to under production and higher prices.
      • 6. Immobility of factors of production.
      • 7.Equality issues.


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