3.3 Market Failures and the Role of Public Policy

Learning Objectives

  1. Define market failures.
  2. Discuss how government efforts to address market failures can be justified to achieve desired social outcomes, such as sustainability.

Government interventions in a private market economy are intended to correct so-called market failures or to achieve a societal objective. We focus here on government interventions to correct private market failures. Market failures can justify government intervention on market efficiency (economic) criteria. A key type of market failure that government tries to address in regulations and laws are externalities. Government policies are also used to address societal concerns that are associated with private market economies, such as economic inequalities. For sustainable businesses, the most relevant market failures are externalities, and we focus on these as follows.

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  • line 7225 of /lib/moodlelib.php: call to debugging()
  • line 7292 of /lib/moodlelib.php: call to {closure}()
  • line 71 of /lib/classes/hook/output/before_footer_html_generation.php: call to get_plugins_with_function()
  • line 987 of /lib/classes/output/core_renderer.php: call to core\hook\output\before_footer_html_generation->process_legacy_callbacks()
  • line 154 of /mod/book/view.php: call to core\output\core_renderer->footer()