How can Markets fail?
- Lack of Competition: This leads to many inefficiencies in how businesses operate. with little or no competition there is less incentive for firms to improve the quality of output to keep the prices low. For example it is only after cheaper options such as Ryanair joined that established airlines had to reduce their prices.
- Not all our values are Market Values: This means that some goods are valued differently by society than the monetary value that is placed on them. Education and healthcare in the UK would not be produced in sufficient quantity by a free market because consumers would not want to purchase those services at those prices. for example we may not understand the true social benefits of having adequate healthcare provision if we had to purchase it as a normal service.
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