Examples Of Market Failure

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Economic Outcome In economics, market failure is not efficient in the allocation of goods and services to achieve the greatest possible consumer satisfaction. Sometimes, market failure is also used to describe the situation where the market forces cannot meet the public interest. Merit goods are improving production by creating policies that interfere with individual preferences (Musgrave and Musgrave, 1973). These products and services are beneficial to people, but people for various reasons refused to consumption, thus influences the social benefit. For instance, education is a merit good. When students are learning, they only know the sacrifices they need to pay, but do not know the benefits of acquiring knowledge for their future jobs,…show more content…
For instance, automobile exhaust is a externalities. Some one is smoking at the public places would bring some troubles to people don’t like the smoke smell. And would influence the environment of working. The impact of smoker on the bystander is adverse, so we called that is a negative externality. An externality arises when a person engages in an activity that influences the well-being of a bystander. When the impact on the bystander is adverse, the externality is called a negative externality. On the contrary, the externality is called a positive externality. Negative externalities cause markets to be excess supply, and thus fail to maximise total surplus. It is because of the existence of negative externalities, the government need to internalise an externality. The most commonly used method is tax. The government controls the output of the products by taxing the relevant enterprises, so as to reduce or balance the gap between the output of the products and the needs of the…show more content…
These emission reduction laws have forced companies to take mandatory emissions cuts and hurt their development. Heavy industry, supporting the British economy, such as some thermal power plants or steel plants, because of legal constraints, need to implement the emission reduction measures that will reduce its output value then affect the development of enterprises. To further affect the level of economic development in the UK and the UK people's living standards. Once the problem of slow economic development appeared, the community will be a series of chain reaction, like unemployment rate rose, lack of confidence in foreign investment, social unrest, etc. A series of emission reduction laws and policies are required to vigorously develop clean technology and fuel. “United Kingdom's emission factor database” (2014) shows that in the past few decades, air quality has been unprecedented improvement. Reduction in air pollutant emissions all thanks to the development of clean technologies and fuels, as well as applications in energy use and transportation driven areas. At this level, the government to develop relevant laws and regulations for the settlement of pollution issues played a catalytic

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