Market Failure
In neoclassical economics, market failure is a situation in which the allocation of goods and services by a free market is not Pareto efficient, often leading to a net loss of economic value.Paul Krugman and Robin Wells Krugman, Robin Wells (2006). ''Economics'', New York, Worth Publishers. The first known use of the term by economists was in 1958,Francis M. Bator (1958). "The Anatomy of Market Failure," ''Quarterly Journal of Economics'', 72(3) pp351–379(press +). but the concept has been traced back to the Victorian writers John Stuart Mill and Henry Sidgwick.Steven G. Medema (2007). "The Hesitant Hand: Mill, Sidgwick, and the Evolution of the Theory of Market Failure," ''History of Political Economy'', 39(3)pp. 331��358. 200Online Working Paper. Market failures are often associated with public goods, time-inconsistent preferences, Information asymmetry, information asymmetries, Market structure, failures of competition, principal–agent problems, externalities,Jean-Jacques L ...
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