Glossary · Micro · Market analysis and welfare

Market failure

Any situation where a free market on its own produces an inefficient outcome. The usual causes are externalities, public goods, market power and missing information.

Taught in: First Welfare Theorem

Related terms

Negative externalityMonopolyAdverse selectionFirst welfare theorem

More from market analysis and welfare

Allocative efficiencyConsumer surplusDeadweight loss (DWL)Price ceilingPrice floorProducer surplusSubsidy

Definitions are the start

See the term used, not just defined.

The full course teaches every term in context, with worked examples, interactive graphs and practice questions that remember what you get wrong.
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