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Market Failure - Coggle Diagram

- - - - Examples include pollution and congestion
        
        They cause a market failure as the firm does not take into account the costs of correcting the externality, e.g. cleaning up the pollution or paying for better transport links like a roundabout at a new supermarket to reduce congestion, and firms therefore over-produce these products
  - - - Examples include vaccinations as other people benefit from not catching an illness which could have been passed on otherwise
        
        The market failure is that as individuals and firms do not take into account the full benefits of producing or consuming a good they will tend to be under-consumed and under-produced
- - - - Examples include street lighting, lighthouses and defence
        
        Means every consumer can still receive the same utility from consuming the product regardless of how many other people are also consuming the product at the same time
    - - An example would be: Jane has a steady job and lives with two friends. They install broadband into the flat however Jane refuses to pay her share. However, if the others cancel the broadband they will not have it. This means that Jane can "free ride" on the broadband whilst others pay the bill
        
        This means that when a product is produced it is impossible to stop other consumers from consuming it. This leads to a "free-rider" problem. This means that many customers will be tempted to not pay for the product but instead have a "free-ride" and use the product without actually paying for it.
  - - - The main examples are education and healthcare
        
        This creates a market failure as, without government intervention, these goods would be under-provided and only those individuals who could afford to pay for them would receive them
- - - - As with merit and public goods, these goods would not be provided without government intervention
- - - - Example: Waste land that has previously had a factory on it
- - - - The government does not aim to get rid of this inequality but simply redistribute some income from the richest to the poorest so that everyone can at least have their basic needs met
- - - - GDP: HIGHEST
      - CONSUMER SPENDING: HIGHEST
      - PROFITS: HIGHEST
      - UNEMPLOYMENT: LOWEST
    - - GDP: FALLING
      - CONSUMER SPENDING: FALLING
      - PROFITS: FALLING
      - UNEMPLOYMENT: RISING
    - - GDP: LOWEST
      - CONSUMER SPENDING: LOWEST
      - PROFITS: LOWEST
      - UNEMPLOYMENT: HIGHEST
    - - GDP: RISING
      - PROFITS: RISING
      - UNEMPLOYMENT: FALLING
      - CONSUMER SPENDING: RISING