Economic 20.docx - Market failure Main articles Market failure Government failure Information economics Environmental economics and Agricultural

Economic 20.docx - Market failure Main articles Market...

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Market failure Main articles: Market failure, Government failure, Information economics, Environmental economics, and Agricultural economics A smokestack releasing smoke Pollution can be a simple example of market failure. If costs of production are not borne by producers but are by the environment, accident victims or others, then prices are distorted. The term "market failure" encompasses several problems which may undermine standard economic assumptions. Although economists categorize market failures differently, the following categories emerge in the main texts.[i] Information asymmetries and incomplete markets may result in economic inefficiency but also a possibility of improving efficiency through market, legal, and regulatory remedies, as discussed above. Natural monopoly, or the overlapping concepts of "practical" and "technical" monopoly, is an extreme case of failure of competition as a restraint on producers. Extreme economies of scale are one possible cause.
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  • Summer '18
  • Cheong Sei Han

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