Occurs when the outcome in a free market is not efficient, meaning that there is another possible outcome where scarce resources are allocated in a way that creates greater net benefits. Many economists and politicians view a market failure as grounds for economic intervention by the government.
Steve Horwitz - Regulation and Intervention
Mark Hendrickson - The Truth About Monopoly and Antitrust
Why Those Who Value Liberty Should Rejoice
OCTOBER 15, 2009
Elinor Ostrom is the first woman to win the Nobel Prize in Economic Sciences. She is also one of the most iconoclastic thinkers to win the prize. Professor Ostrom's work focuses on the mechanisms of self-governance that operate in different societies.
AUGUST 05, 2009 by WILLIAM ANDERSON
From an economic point of view, a scarce good is a scarce good, whether it is medical care or sirloin steak. The problem is that government has piled intervention on top of intervention, and driving up the costs and making care less available in the process.
Related Freeman Articles
Imperfect knowledge is not an argument for government oversight.
MAY 15, 2012 by SANDY IKEDA
Neither losses from error nor profits from good decisions are grounds in themselves for tighter regulation.
How about government failure?
DECEMBER 08, 2011 by STEVEN HORWITZ
Which process has better built-in mechanisms to provide the knowledge and incentives necessary to notice imperfections and improve on them?
IT JUST AIN'T SO
Market-Failure Arguments Ignore Incentives for Market Participants to Overcome Assymetric Information
DECEMBER 01, 2007 by JOSHUA C. HALL
IT JUST AIN'T SO
The Source of Most "Market Failures" Can Be Traced to Government
NOVEMBER 01, 2005 by ARTHUR FOULKES
Despite its remarkable record the free market remains for many people a tough sell. Even those who on balance support free enterprise hesitate to give unregulated market forces their full endorsement.
MULTIMEDIA - VIDEO
NOVEMBER 14, 2012 by STEVEN HORWITZ
Should governments regulate and intervene to correct "market failures?"
Steve Horwitz explains the dynamics of interventionism and the issues with regulating and intervening in the free market.
"What regulation and intervention do is prevent markets from discovering new ways of solving existing problems and new ways of solving new problems. When regulation erects barriers to entry or other kinds of limits on market behavior, it cuts short this discovery process, and that leads to inefficiency and waste of resources."