Well, because I am the first to start on the topic of market failure, I shall define what is a market failure first.
"In economics, a market failure exists when the production or use of goods and services by the market is not efficient. That is, there exists another outcome where all involved can be made better off. Market failures can be viewed as scenarios where individuals' pursuit of pure self-interest leads to results that are not efficient – that can be improved upon from the societal point-of-view.The first known use of the term by economists was in 1958, but the concept has been traced back to the Victorian philosopher Henry Sidgwick. Market failures are often associated with non-competitive markets, externalities or public goods. The existence of a market failure is often used as a justification for government intervention in a particular market. Economists, especially microeconomists, are often concerned with the causes of market failure, and possible means to correct such a failure when it occurs. Such analysis plays an important role in many types of public policy decisions and studies. However, some types of government policy interventions, such as taxes, subsidies, bailouts, wage and price controls, and regulations, including attempts to correct market failure, may also lead to an inefficient allocation of resources, (sometimes called government failures). Thus, there is often a choice between imperfect outcomes, i.e. imperfect market outcomes with or without government interventions." http://en.wikipedia.org/wiki/Market_failure Kendall.
|
