List the types of market failure.

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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...

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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.
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