Briefly explain income distribution as a source of market failure

      

Briefly explain income distribution as a source of market failure

  

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Faith
Pareto efficiency says nothing about income distribution. Therefore competitive markets may leave some individuals with insufficient to live. Even if the competitive industry is efficient, the distribution which it gives to may be viewed as undesirable. Hence the government activity in this case is to alter the income distribution. To get more equity, some amount of efficiency must be sacrificed.
Faimus answered the question on February 25, 2019 at 19:06


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