Addressing Market Failures

Addressing market failures involves government or other interventions to correct situations where markets alone don't allocate resources efficiently or fairly. These failures can occur due to externalities (costs or benefits not reflected in prices), public goods (which everyone can access without reducing others’ access), information asymmetry (where one party knows more than another), or monopolies. By implementing policies like taxes, regulations, or subsidies, authorities aim to ensure resources are distributed more equitably, motivate positive behaviors, and reduce negative impacts, ultimately promoting economic efficiency and social welfare.