Market Failure: Analysis

Abstract

Given that there is no agreement on the procedure by which economic efficiency should be measured, a closed catalogue of market failures cannot be talked about. There is however a reasonable agreement in economic literature on the identification of up to a total of five reasons for the existence of market failures: public goods, externalities, imperfect competition, information failures, and incomplete markets. There are three other situations that some authors also include in the list of market failures: merit goods, an unbalanced macroeconomic situation, and economic situations that assault criteria of equity.