kidzsearch.com > wiki   Explore:web images videos games  

Market failure




KidzSearch Safe Wikipedia for Kids.
Jump to: navigation, search
Factories and refineries provide jobs, but they also pollute the environment. In economics, this is an example of market failure.

In neoclassical economics, market failure is a situation in which the allocation of goods and services by a free market is not Pareto efficient. Common causes of market failure are information assymmetries, externalities, natural monopolies and public goods. Market failure is one of the reason why a state regulates a market to improve the allocation.