Market Failure In The United States

In society Markets are an essential part to help the United States Economy, except sometimes this is not the case. There are times when markets can affect our economy, when this occurs, it is called a Market failure. Except, what exactly is a market Failure? According to our textbook, market failure is, “When our resources [and services] are not allocated efficiently.” (Page 56). What this means is that the amount of demand from the customer does not equal the amount of what is supplied by the suppliers. This affects the economy since all of resources and services are not used to its full use, in which it creates a waste of these things. Some of the reasons why market failures such as creating really high price while there is a low amount of production. There are several events that occur in the market aspects, in which are considered to be Market Failures. Two types of market failures that will be discussed are externalities and the lack of markets or can also be called the lack of public goods and services. The first type of market failure is
Externalities. Before externalities can be discussed we need to be able understand External Effects. Under these effects there are two key terms that need to be discussed, external cost and external benefit. External Cost it refers to the instances in which manufacturing or buying goods and services forces an extra cost to other companies who are not involved in buying or making the good or services. External Benefit refers to a benefit that a company that is not involved in making or providing services receives. Now, having an understanding things that affect a third person in making or buying goods or services. Externalities refers to the idea that a third party is impacted when a certain company buys or sells goods and services. Having externalities, it makes the markets be inefficient in which they cannot have maximum production and have any excess production. The second type of market failure would be the lack of public goods and services or Lack of Markets.
A lack of market refers when a certain good or service is needed, except there are no suppliers to make a good or provide a certain service. In these cases, many we have two concepts named non-rivalry and non-exclusive. In non-rivalry when a person consumes a certain good, it does not minimize the amount that is available. Non-exclusionary refers when a certain good or service is provided to someone, other people can use the product and can use it if they like. The problem with these two terms is that people who would like the goods or a service, would wait until someone in society has paid for it, and could get benefit from it for free. If this continues, nobody would buy a certain good or service, and this good or service would go missing in the market. This is why a Lack of market would create a market
failure. Overall, there is no way for the economy to be perfect, at any time. There are many ways in which there could be a potential market failure. There are always external things that are out of the company’s hands to control. Therefore, in many situations the government is the one that has to step in and implement laws to help the economy. There needs to be a way in which all of the resources be used efficiently, to prevent a market failure to occur.