The Major Causes Of Market Failure

Our country faces many types of marketing issues. However, one of the main reasons for many of the economic issues we face today are a result of market failure. What is market failure? What causes market failure? What role does our government play in correcting market failure? All of these questions will be answered in this paper along with a personal opinion of our government’s role. What is market failure in our economy? Market failure in economics, is referred to as a situation or circumstance in which the allocation of services or goods is not efficient. Market failure can be addressed as problems involving natural resources and our environment and the lack of having enough resources. This will result in scarcity because we live in a world that suffers from infinite wants without worry of how our market and …show more content…
Market failure as a result of several reasons. Many of the reason are: monopoly power, negative externalities, missing market and De-merit goods. However, the most common causes are productive allocative inefficacy, which is causes when markets fail to allocate or produce resources in the most efficient way. Another cause of market failure is unemployment. Unemployment is perhaps the most recognized reason for market failure. Unemployment plays such a major role in market failure due to the periods of high unemployment of machine as well as people cause a shortage in consumer spending resulting in a lack of spending power. This in turn cause a drop in the market and economy. These are just a few of the reasons our economy faces market failures. Ultimately market failures occur when to little or too much of our services and goods are produced then consumed by our economy. As a result of market failure due to many of the causes listed, our economy often requires government intervention. Government intervention is required to get the economy back on track and help the market recover from the loss and or