1 / 6

Market Failures

Market Failures. Chapter 7 Section 2. Public Goods. Collectively consumed by everyone Examples: highways, flood control measures, national defense, police and fire protection Government normally has to supply these. Inadequate Competition. Due to: mergers and acquisitions

josephwagner
Download Presentation

Market Failures

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Market Failures Chapter 7 Section 2

  2. Public Goods • Collectively consumed by everyone • Examples: highways, flood control measures, national defense, police and fire protection • Government normally has to supply these

  3. Inadequate Competition • Due to: mergers and acquisitions • Inefficient Resource Allocation: • If a firm controls the market-no reason to use resources (money) carefully • Higher Prices and Reduced Output: • Artificial shortages • Economic and Political Power: • Bosses • Both Sides of the Market • Both on supply side and demand side

  4. Inadequate Information • Some information is easy to find: want ads, sale prices, commercials • If knowledge is important to buyers, but hard to find=MARKET FAILURE

  5. Resource Immobility • CELL does not move to markets where there is the most return • Resource Mobility is an ideal situation for a free enterprise economy, but is very difficult to accomplish in the real world

  6. Externalities • Externality: an unintended side-effect that can either benefit or harm a third party • NEGATIVE Externality: harm, cost, or inconvenience suffered by a third party • Noise inconvenience due to airport expansion • POSITIVE Externality: benefit received by a third party • Local restaurants benefit due to airport expansion

More Related