5 causes of market failure
Storyboard Text
- Market Failure and the Government
- FIVE CAUSES OF MARKET FAILURES
- Not Enough Competition
- This is the only gas station in the country, so the prices are outrageous! This is generating market failure since they are using resources inefficiently.
- Not Enough Information
- I was not informed that the used car i bought had been in three accidents, so I paid $6,000 for it when it is truly worth $2,000. The number of miles driven, the number of accidents, and the number of previous owners are all factors that might influence the final price. As a result, the genuine value is not linked with its price, resulting in inefficient resource allocation.
- By: Isabella Farina
- Resource's That Can't, or Won't, Move
- The government may address this by prohibiting many corporate mergers, which frequently result in larger and fewer corporations dominating an industry.
- Too Few Public Goods
- This highway is filthy and unkempt since the government built it but does not pay for its upkeep because it generates no profit.
- Government can fix this by providing the public with accurate information.
- Externalities or Spillover Effect
- The government could solve this issue by taxing large companies for moving and leaving many workers out of the job.
- FOR SALE
- The auto assembly plant I worked at moved out of state. I was offered a job, but am unable to take it because it is out of state and I am unable to sell my house.
- The government could put more tax dollars into public goods to repair and expand them when needed.
- The government could tax harmful spillovers.
- This new factory has caused pollution, which is a harmful spillover/ negative externality to civilians who live near by.
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