MARKETS and MARKET FAILURE
MARKET FAILURE
Define market failure:
Give examples of the market functioning inefficiently:
How are markets supposed to perform? Explain these functions (SIR):
|Signalling |Incentives |Rationing |
| | | |
| | | |
List the different forms of market failure and explain each one:
P
E
M
M
I
I
I
EXTERNALITIES
Private + External = Social
Externalities are
| |Private |External |Social |
| |Costs |Benefits |
| | | |
| | | |
|Excludability | | |
| | | |
| | | |
| | | |
| | | |
|Rivalry | | |
| | | |
| | | |
| | | |
| | | |
|Rejectability | | |
| | | |
| | | |
Give some examples of public goods.
Why will the market fail to provide public goods?
Can a city survive without public goods?
Explain why TV broadcasting might be classified as a public good and explain why TV broadcasting can also have some characteristics of a private good.
What role has technological change played in this?
What is meant by a quasi public good?
Explain how imperfect and asymmetric information can lead to market
failure.
Assymetric information
Explain how the existence of monopoly and monopoly power can lead to
market failure.
Explain how the immobility of factors of production can lead to market failure.
Explain why the market system results in an unequal and inequitable distribution of income.
How does this lead to market failure?
Case Study - Market Failure in the UK Housing Market
UK Housing Market Rising House Prices Supply of housing
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