Substantial market distortion

Substantial market distortion occurs when external factors, such as government interventions, monopolies, or significant economic events, disrupt the natural functioning of a market. This can lead to prices that don't accurately reflect supply and demand, resulting in inefficiencies. For example, if a government sets a price ceiling on a product, it can create shortages, as suppliers may not find it profitable to sell. Such distortions can harm consumers and producers alike, leading to reduced innovation and economic growth, ultimately affecting the overall health of the economy.