Market failure occurs whenever the market mechanism leads to an inefficient or inequitable allocation of resources. This means that the wrong products are produced or they are produced in an inefficient manner.
Markets may fail for a variety of reasons including a lack of information on the part of consumers or producers, because of the existence of barriers to entry or because of the existence of externalities.
Examples of market failure include the existence of monopolies, the failure to provide public goods, the under provision of merit goods and an unequal distribution of income and wealth.
marlinbito answered the question on July 5, 2018 at 10:05
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