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Questions tagged [market-failure]

A situation in which a market fails to produce an efficient (i.e., welfare-maximizing) allocation.

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How does social cost and social benefit work?

I am really lost right now. I have a test tomorrow and I am stressing out. Whatever I look at for externalities, which could be my textbook, a website, notes from class, they all contradict each other....
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19 views

How does private benefit exceed social benefit?

I've done economics for 3 months only, so bear with me. If Social Benefit = Private Benefit + External Benefit Then how is it physically possible that private benefit could ever exceed social ...
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Does labor mobility create a certain type of market failure?

Oxford professor Ewart Keep writes in a paper titled Market Failure in Skills (p. 3) that For firms there is the problem of investment in staff who may leave taking their skills with them. ...
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81 views

Asymmetric information assumption

This question isn't about asymmetric information per se but rather one of the assumptions. Consider a market for second hand cars; there are lemons (low-quality cars) and plums (high-quality cars). ...
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1answer
57 views

How to improve the underperforming construction productivity by correcting its market failures?

Globally, labor-productivity growth in construction has averaged only 1 percent a year over the past two decades, compared with growth of 2.8 percent for the total world economy and 3.6 percent in the ...
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Is there a way participants in an industry to also discuss how to keep a market healthy without it being considered collusion?

For a particular niche in demand but broad in utility industry, I am both a consumer and producer that participates internationally, and within segments there are public informal concerns that the ...
2
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1answer
258 views

Why is there a deadweight loss in this lemons market?

Is there a deadweight loss in this used car market and why? On the plums side we can make a pareto improvement by exchanging information and matching 200 buyers and sellers who will gain from trade. ...
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3answers
101 views

Looking for a term that explains market participants that lie about their participation to gain access to said market

I'm Looking for a term that explains the behavior of a market participants that will lie or exaggerate how much or what they offer in order to gain access to a market that would otherwise be ...
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2answers
102 views

Calling 118 118 (UK) - A market failure?

Is the shocking cost of directory enquiry numbers in the UK a market failure, or the economy working perfectly well? EDIT: I know that proponents of free markets often like to blame over-regulation ...
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1answer
154 views

What would a negative externality diagram look like if the initial price is equal to 0 and then increased with tax?

The price of plastic bags in Scotland has been increased from free to 0.05 pounds sterling. How would I represent the negative externality decrease using a diagram in such a situation? This is what I ...
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92 views

Is there a comprehensive list of all market failures ever discovered?

I'm looking for a complete run down of all different kinds of market failures; Wikipedia has a list but I'm not sure if there might some obscure kinds of market failures that Wikipedia is missing. ...
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2answers
901 views

Is market failure the same allocative inefficiency?

From an IB Economics book (in the microeconomics section): The part in blue suggests market failure is the same as allocative inefficiency, but the part in red seems to suggest that market failure is ...
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264 views

Confusion regarding remedying negative externalities of consumption through taxation

This diagram in my textbook illustrates two solutions to a negative externality of consumption - here, the consumption of cigarettes. It states that MSC is shifted upwards by the specific tax. Since ...
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Are there examples of businesses that profit from helping consumers coordinate better?

In economics, its often assumed that individuals are unable to coordinate. Moreover, its often assumed that one of the roles for the government is to help consumers coordinate. However, its also ...