Definitions Market failure occurs when resources aren’t allocated in an optimal manner, meaning that the market isn’t allocatively efficient, and community surplus isn’t maximized. Negative externalities are the ‘bad’ effects that are suffered by the third...
Market failure Market failure: the failure for the market to successfully achieve allocative efficiency, because there is an over or under provision of a good. So community surplus is not maximized and the socially desirable level of output is not achieved. Marginal...
Asymmetric information (HL) Asymmetric information: when buyers and sellers do not have equal access to information in a transaction. Sellers have more information: in the second hand car market and at the doctors/dentists there is unequal information. This is also...