Tooteturustõrge

Tooteturustõrge, or market failure, is an economic situation where the allocation of goods and services by a free market is not efficient. This means that the market alone does not produce the optimal outcome for society. Market failures can arise from various sources, preventing the invisible hand from guiding resources to their most valued uses.

One common cause of market failure is externalities. These are costs or benefits that affect a party who did not choose to incur that cost or benefit. For example, pollution from a factory is a negative externality, as it imposes costs on society that the factory owner does not pay. Conversely, vaccination can create positive externalities, as it not only protects the vaccinated individual but also reduces the spread of disease to others.

Another significant cause is the presence of public goods. These are goods that are non-excludable (it's impossible to prevent people from consuming them) and non-rivalrous (one person's consumption does not diminish another's ability to consume them). National defense and street lighting are classic examples. Because individuals can benefit from public goods without paying for them, private firms have little incentive to provide them, leading to underproduction.

Information asymmetry also contributes to market failure. This occurs when one party in a transaction has more or better information than the other. For instance, in the used car market, sellers typically know more about the car's condition than buyers, which can lead to the "lemons problem" where good quality cars are driven out of the market. Monopolies and oligopolies, where a single firm or a few firms dominate a market, can also lead to inefficient outcomes by restricting output and raising prices above competitive levels. Governments often intervene through regulations, taxes, subsidies, or direct provision of goods and services to address these market failures.