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Market Failure - Coggle Diagram
Market Failure
Definition - When the free market fails to allocate scarce resources at the soically optimum level of output
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Public goods
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Non-excludable (no price can be charged for the good) and non-rival (quantity of good doesn't diminish upon consumption)
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Common access resources
Natural resources over which no private ownership has been established. Private producers will act according to their self-interest and unsustainably keep exploiting common access resources. Eventually leading to a depletion of that resource.
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Monopoly power
A monopoly can be classified as a market failure because the market is meant to be maximising welfare for society. The monopoly prices higher than a competitive market and restricts output, which is not maximising welfare for consumers.
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