Routledge Dictionary of Economics, Second Edition
market failure (D0, H4, Q0)
1 The malfunctioning of a market because of the imperfections in it.
2 EXTERNALITIES because a market is producing social costs.
3 The lack of a market for a particular good or service, as in the case of PUBLIC GOODS.
The most familiar of failures are UNEMPLOYMENT, persistent shortages of particular skills, balance of payments disequilibria, the production of PRIVATE GOODS at considerable external cost, regional problems and unanticipated inflation.
See also: market distortion; missing market
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