Market failure

Arises from several distinct sources, including public goods, externalities, merit and demerit goods, monopoly and other market imperfections, and inequalities in the distribution of income.

A situation where the mechanism fails to account for externalities or asymmetric information, which can distort objective efficiency and often necessitates state intervention to correct it.

A situation where the price mechanism produces disadvantages such as the under-provision of merit goods, over-provision of demerit goods, externalities or missing markets for public goods.

A situation demonstrated by comparing the free market equilibrium with the socially optimal position, where the deadweight welfare loss triangle represents the misallocation of resources.

A situation where the price mechanism fails to allocate resources efficiently, often resulting in the over-consumption of demerit goods or the under-consumption of merit goods.

Arises where unequal distributions lead to unequal access to education and credit, so marginalised groups cannot access credit or education and economic potential is wasted.