Market Failure Versus Government Failure

Abstract

Chapters 1–4 of this book elaborated the perspective that the free and competitive market is an effective means of resolving the basic economic questions surrounding the use and allocation of scarce resources. However, in Chapter 5 we saw that once the implicit assumption that free markets are necessarily competitive is relaxed, established certainties as to the inherent strengths of laissez-faire begin to melt away. In real markets, the existence of monopoly and oligopoly directly undermines consumer sovereignty, and may be inimical to general consumer interests.