This article throws light upon the various instances of market failure which calls for government intervention for correction. The instances are: 1. Externalities 2. Provision of Public Goods 3. Decreasing Cost 4. Uncertainty as a Source of Market Failure 5. The Distribution Function 6. Market Efficiency and Income Distribution. Market Failure: Instance # 1. Externalities: Externalities refer to spillover or [...]
In this article we will discuss about the multiple theory of public household. Economists have paid much attention to the formulation of theories that examine the problems of consumer households, business firms, trade unions and other decision making units in the economy. However they have not made any serious attempt to develop a corresponding theory of the public economy. The [...]
After reading this article you will learn about the relationship between positive externalities and allocative efficiency. Positive externality occurs whenever private markets fail to allocate resources on the basis of full social benefits. Immunization against communicable disease, external benefits from education at schools are typical examples of positive externalities. Individuals who are external to the market exchange are not required [...]