1 Answer | Add Yours
There are three main types of market failure. They are:
- Monopoly. In some cases, one competitor in a market can come to dominate that market completely. In such a case, there is no competition and consumers no longer gain the benefits of a market economy.
- Externalities. These are costs (or benefits) imposed on people who are not party to an economic transaction. The classic example of this is pollution that is caused by a given industry and which affects people not involved in that industry.
- Public goods. Markets fail to provide public goods. These are things like national defense that cannot be provided only to those who pay for them.
We’ve answered 317,671 questions. We can answer yours, too.Ask a question