Market_Failure_Detailed_Presentation1.pptx

Market_Failure_Detailed_Presentation1.pptx

• 1.
  Market Failure: Causes,Types, and Key Concepts Economics Lecture Presentation Prepared by: [Your Name] Date: [Insert Date]
• 2.
  What is MarketFailure? • Formal Definition: A situation where the allocation of goods and services by a free market is not efficient. • At least one person can be made better off without making anyone else worse off (Pareto inefficiency). • Examples: Pollution from factories, lack of public goods, monopolies. • Source: Varian, Intermediate Microeconomics; Mankiw, Principles of Economics
• 3.
  Causes of MarketFailure • Imperfect competition (monopoly, oligopoly) • Public goods (non-excludable, non-rivalrous) • Externalities (positive & negative spillovers) • Information failure (asymmetric info) • Missing markets (essential goods not provided)
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  Types of MarketInefficiency • Allocative Inefficiency: Price ≠ Marginal Cost • Productive Inefficiency: Resources wasted, not at lowest cost • Equity Issues: Unequal distribution of wealth/income
• 5.
  Imperfect Competition • Definition:Market structures where firms have market power. • Monopoly → Single firm, sets high price, low output. • Oligopoly → Few large firms, possibility of collusion. • Monopolistic Competition → Many firms, differentiated products.
• 6.
  Monopoly vs PerfectCompetition • Perfect Competition: P = MC, higher output, lower prices. • Monopoly: MR = MC, restricts output, charges higher price. • Creates Deadweight Loss (loss to society). • [Insert Graph: Monopoly vs Perfect Competition with DWL] • Source: Pindyck & Rubinfeld, Microeconomics
• 7.
  Externalities – Negative •Definition: Costs of production/consumption affecting third parties. • Example: Air pollution, cigarette smoke. • Problem: Market produces too much output. • [Insert Graph: Supply (Private Cost) vs Social Cost]
• 8.
  Externalities – Positive •Definition: Benefits of production/consumption spill over to others. • Example: Vaccination, education, public parks. • Problem: Market produces too little output. • [Insert Graph: Demand (Private Benefit) vs Social Benefit]
• 9.
  Public Goods • Definition:Goods that are non-excludable & non-rivalrous. • Free-Rider Problem: People consume without paying. • Examples: Streetlights, national defense, clean air. • [Insert Diagram: Free Rider Issue Illustration]
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  Information Failure &Missing Markets • Information Failure: Buyers/sellers lack full information. • Examples: Used car market (hidden defects), fake medicines. • Missing Markets: No provision of essential goods (flood insurance). • Government may step in to regulate/provide.
• 11.
  Government Role &Policies • Taxes & Subsidies: Correct externalities. • Regulation & Standards: Safety, pollution control. • Provision of Public Goods: Defense, healthcare, education. • Competition Policy: Anti-monopoly laws. • [Insert Graph: Tax shifting supply, Subsidy shifting demand]
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  Real-Life Examples • DelhiAir Pollution → Negative Externality. • Polio Vaccination Campaign → Positive Externality. • Streetlights → Public Goods, free-rider issue. • Jio & Airtel duopoly in Telecom → Imperfect Competition.
• 13.
  Summary & Takeaways •Market failure = when markets alone do not achieve efficiency. • Causes: Imperfect competition, public goods, externalities, info failures. • Government plays a crucial role in correcting failures.
• 14.
  References / Bibliography •Varian, H. R. (2014). Intermediate Microeconomics. • Mankiw, N. G. (2020). Principles of Economics. • Pindyck, R., & Rubinfeld, D. (2017). Microeconomics.