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Microeconomics Market Failure Government Intervention Essay

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Market Failure
Market failure can be defined as give full play to the market mechanism but still cannot achieve social welfare maximization. Market failure was caused by the free market fails to allocated resources in an optimum and efficient manner. Type of market failure can be divided into three types; there are externalities, public goods and non-competitive behavior. Externalities is part of the interests of people's economic behavior cannot be classified for their own enjoyment of, or part of the cost do not have to be borne. Such as manufacturers produced products will influence the third parties. Externalities can be divided into positive externalities and negative externalities. Typical negative externalities refer to the environmental pollution. For example, emissions of the waste water during the production and noise caused by the construction project, these activities will cause environmental pollution. On the other hands, ...

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