Markaðsrof
Markaðsrof, often translated as market failure, occurs when the allocation of goods and services by a free market is not efficient. This means that the market, left to its own devices, does not produce the optimal outcome for society. Several factors can lead to market failure, including externalities, public goods, information asymmetry, and market power.
Externalities are costs or benefits that affect a third party not directly involved in a transaction. For
Public goods are non-excludable and non-rivalrous, meaning they cannot be withheld from anyone and one person's
Information asymmetry arises when one party in a transaction has more or better information than the other.
Market power, such as monopolies or oligopolies, allows firms to influence prices and output, leading to less