markkinavääristymiin

Markkinavääristymä refers to a situation in economics where the allocation of goods and services by a free market is not efficient. This can occur due to various factors that prevent the market from reaching its ideal equilibrium, where supply and demand perfectly match.

One common cause of market distortion is government intervention. This can take the form of price controls, such as minimum or maximum prices, which artificially set the cost of a good or service. Subsidies, where the government provides financial assistance to producers or consumers, can also distort markets by encouraging overproduction or overconsumption. Tariffs and quotas, which restrict international trade, can lead to higher domestic prices and reduced consumer choice.

Another significant cause of market distortion is the presence of externalities. These are costs or benefits that affect a third party not directly involved in the transaction. For example, pollution from a factory is a negative externality, imposing costs on society that are not reflected in the price of the factory's products. Conversely, positive externalities, like the benefits of vaccination, are not fully captured by the individual receiving the vaccine.

Information asymmetry, where one party in a transaction has more or better information than the other, can also lead to market inefficiencies. This is particularly relevant in markets for complex goods or services, such as insurance or healthcare.

Finally, the existence of monopolies or oligopolies, where a single firm or a few firms dominate a market, can lead to higher prices and lower output than would occur in a competitive market. These distortions can lead to a misallocation of resources, reduced consumer welfare, and slower economic growth.