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Market Failure

Market failure signifies a situation present in the free market leading to inability to allocates economic resources to the entire region. From the economists’ points of view, market failure implies a situation where people in a particular area do not enjoy evenly distributed goods of services due to many factors. Some of these aspects are inequality of market competition, the existence of negative externalities, among other factors. In this case, the decision made by individual market participant seems to be wrong for collective members in a particular market area. Taking individual states as an example, advocating for free markets means that actions taken by one country can potentially affect (positively or negatively) a whole economic block.

In my opinion, governments have several options which they can use to establish a sustainable market structure. First, I think market failure can be remedied by establishing a standardized pricing mechanism. This way, the buying behaviors of consumers can be adjusted to the best fit. The second approach is to enforce legislation that aims at supporting the consumption of some products as well as discouraging others.  For example,...