12.5+Market+Failure

=Market Failure =

In an unregulated market, allocative efficiency may not be achieved. Market failure may result, which is the inability of an unregulated market to achieve, **in all markets and circumstances,** an efficient allocation of resources.

The sources of market failure that you need to know for this course are:


 * public goods
 * externalities (positive and negative)
 * market power
 * asymmetric information

Here is a brief introduction to the concept of asymmetric information as presented by Tim Harford, author of the [|Undercover Economist] (a book you should all read).

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[|Where there's smoke, there's good reason for higher health premiums] 