Overview
Market failure is a significant concept in economics that describes situations where the allocation of resources is not efficient, leading to a loss of economic welfare. This can occur due to various factors, including externalities, public goods, market power, and information asymmetry. Understandi...
Key Terms
Example: Pollution from a factory affects nearby residents.
Example: National defense.
Example: A monopoly controlling the supply of a unique product.
Example: A seller knows more about a car's condition than the buyer.
Example: People enjoying a public park without contributing to its maintenance.
Example: Laws that break up companies that dominate a market.
Related Topics
Market Structures
Study of different types of market systems and their characteristics.
intermediateGovernment Intervention
Exploration of how government actions can correct market failures.
intermediateBehavioral Economics
Understanding how psychological factors affect economic decision-making.
advancedEnvironmental Economics
Study of economic impacts on the environment and policies for sustainability.
intermediateKey Concepts
ExternalitiesPublic GoodsMarket PowerInformation Asymmetry