There is a huge amount of misinformation about market failures online, even on the wikipedia article. Many of the things people often list as market failure are very much not market failures. In particular, tvbc is completely wrong (but is in good company of many others who parrot the same wrong information) that deviation from perfect competition are market failures.
There are only 3 broad types of market failure:
- Anti-competitive markets (eg monopolies)
- Suboptimal initial resource allocation
I explain in the article why these are the only 3 possible market failures.
There are a number of things that some claim are market failures, but are not. Examples include:
- information asymmetry
- time inconsistent preference
- "missing" markets
- conflict of interest
- factor immobility
- "internalities" like smoking
Cases of these things do indeed cause inefficiencies in comparison to the ideal of perfect competition, not inefficiencies caused by the failure of the market to incorrectly evaluate prices. For example, information has a cost, and when that cost is considered, it becomes clear that markets usually rationally and efficiently decide when to remain ignorant (when to do so is always when the cost of escaping ignorance isn't worth the benefit).
There are also a number of things that are market failures and fall under one of the 3 broad categories I listed above:
- public goods and public "bads"
- merit and demerit goods
- indivisible property
- common property