In the notion the inefficient distribution of services as well as goods by the system of free market are described. In the notion it is implied that one of the participant of the market can end up in better off…
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One real life example of market failure is immobility of labor. The main types of market failure include the presence of gaps in skills, immobility of labor and inequality (Riley, 2011).
There are two types of labor immobility- occupational, geographical and industrial. There are some imperfections in the market for labor which might lead to failure of market. For occupational labor mobility the main causes of market failure is skills do not match for the new jobs that are available. Often new jobs are available in the market but the available skills of the labor do not match the requirements. The second cause for the occupational labor mobility resulting in market failure is long term unemployment can lead to loss of skills on the part of the labor. If workers are not involved in work for a long term may be due to unemployment or for some other reason, they may lose their efficiency and their skills can be lost. The third cause that can be accounted is barriers to entry into the market eg, professional bodies. Sometimes a labor may not have the required skills to enter into a market. In case of geographical labor mobility the causes include differences in the price of houses in different regions, social bonding and family and differences in the cost of living (Revision on Labor Market Failure, n.d.)
The failure of labor market can lead to structural unemployment, inflexibilities in the market of labor, continuous shortage of labor supply in some areas while surpluses in the others, rising wage and inequality of income, widens regional disparity and unemployment which has both, economic as well as social costs (Economics online, n.d.).
The government can divert investment in education and training of personnel. This will induce the human capital in the total labor force. Subsidies in employment can be provided in cases of
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(Market Failure Essay Example | Topics and Well Written Essays - 500 Words)
“Market Failure Essay Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/macro-microeconomics/1593534-market-failure.
In such a case, there exists another possible outcome where the market participants’ gains would compensate their losses. Market failure is a serious issue as in consequence it disrupts social and economic region of a particular region or even the whole country.
The six conditions in which markets fail to lead to efficient outcomes are those in which competition fails, situation in which public goods are involved, market situations in which there are externalities, situations in which markets are incomplete, situations in which information is imperfect, and situations in which there are macroeconomic disturbances
These economic systems are based on different philosophies. Capitalism focuses on free market and liberalization where every player has a right to earn profits. Government control and intervention is only nominal in capitalistic economy. Communism, on the other hand, aims at a classless society where everyone is equal and state is extremely strong.
Both Ibn Khaldoun and Albert Hourani are two thinkers and political analysts, who have their own theorization about political development in the Middle East and Arab region. In Ibn Khaldoun’s “Muqaddimah” and Hourani’s "A History of the Arab Peoples," the two authors attempt to precisely raise the delicate thread of the history of Arab peoples to understand the profound changes and take objective traditions that underpin the divisions of a culture as rich as unknown in the West.
Unregulated open fisheries in the Pacific Ocean created a common resource for the fishermen. Both local fishermen and foreign fishermen exploited these resources with the aim of maximizing private profits. This decreased the total reserve of fish in these areas and at one point of time the cod population became extinct (“Fish Stock Depletion”).
Another theme in the readings is unreasonable government intervention in market systems. The author supports the theme through identification of research findings that while failures are used as basis for government regulations, such assumed failures may not be real (Ballonoff, 1999).
The author states that according to the classical school of thoughts, efficient outcome in the market might be achieved at some given conditions of price, cost of production, availability of products and entry barriers. The condition of efficiency is violated if the assumptions related to these factors fail to hold true.
High prices motivate producers to produce more while it kills the morale of consumers from purchasing the products. Pricing system sometimes does not consider income inequality in that price of certain goods and services are always high
The interventions comes in terms of taxes, subsidies, bailouts, wage and price controls and regulation in an attempt to correct the failure which at times further aggravates the situation hence leading to government failure .
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