CHAPTER I INTRODUCTION 1.1 Introduction of Market Failure A market failure is the inability of the market to produce a desirable product or to produce a desirable product in the "right" amount. Market failures are a common occurrence, as positive and negative externalities yield results that are imperfect (or, at least, not ideal) and warrant correction. We will consider several methods for correcting allocative issues in the market and reducing the incidence of market failures. In order to fully understand market failure, it is important to recognize the reasons why a market can fail. Due to the structure of markets, it is impossible for them to be perfect. As a result, most markets are not successful and require forms of intervention. According to K. Arrow and G. Debreu following condition must be satisfied if markets are to yield efficient outcomes: i) ...
If there is a will there is the way...