Question

discuss FIVE (5) reasons why markets fail??

Answer 1

=> ANSWER ::

Market Failure Occur When The Price System In Market Fail To Measure All Of The Cost And Benefits Necessary To Provide That And Consume A Goods By The Consumer :: The Five Reason For Market Failure Are As Mentioned Below ::

(1) Market Not Completed :: If Market Not Completed for Some Goods Like Public Goods In Perfect Competition Is A Cause Of Market Failure. Market Does not fulfill Social And Private Benefit Because Market is Failed.

(2) imperfect Market :: We Know That Market Efficiency Increase In The Perfect Competition but In The Imperfect Competition Efficiency Decrease So Market Failure Occur in The Market.

(3) Incomplete Information :: In Perfect Competition consumer Have a perfect Knowledge About Market but Sometimes Incomplete Information Spread In The Market So It Cause market Failure.

(4) Externalities :: Sometimes Negative and Positive Externalities In consumption Failed Market It Cause Market Imperfection so Price And Service Mechanism Failed So It Leads to Market Failure

(5) Existence Of Public Goods :: Public Goods are Those which provided By Government And It does not Reduce By Its consume It is Available for All. So That Kind Of Public Goods Create Externalities In The Market So It Leads To fail Market.

So With The Above Discussion We Know That There Is Lots Of Reasons Available In The Market That Cause Market Failure.