Market failure in microeconomics occurs when the production and the employment of the goods and services is considered to be ineffective or inefficient.. As a result non competitive markets are considered to be market failures.
In theory the only type of market which is not a failure is perfect competition, however this type of a market does not exist in reality and therefore market failure is often considered when exploitation of the consumers, and inefficient allocation of the resources are present in a market. In this regard even the monopoly as a market structure is considered to be a type of market failure due to allocative inefficiencies. In a monopoly, one firm dictates and controls the market and operates as per the self interest and profit maximization motives.
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