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Essay / Research Paper Abstract
This 6 page paper considers what is meant by market failure and the causes of market failure. When examining the causes examples are given to illustrate the points raised, specific attention is paid to market failure issues that will impact on developing nations. The bibliography cites 2 sources.
Page Count:
6 pages (~225 words per page)
File: TS14_TEmarkfail.rtf
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Unformatted sample text from the term paper:
(Howells and Bain, 1998). In many cases the market failure may be one that goes unnoticed, on other occasions it is one that creates headlines. The presence of market failure
is often put forward as a reason for regulation in order to prevent market failure from occurring. It is worth noting hat different market may be likely to see different
types of market failure, and as such it is an issue for all markets, but it is also one that may be seen as key in the economic development of
third world nations, as market failure here may not only be minor, but a major problem, causing problems such as food shortages.
When looking at market failure four main potential causes have been identified, these are market power abuse, the influence of externalities, the need for public goods and the present of
asymmetric information. Market power can lead to the abuse of a strong market position. This is a scenario when there may be
a single seller, as seen in a monopoly, but it may also be a monopsony, where there is a single buyer, it may also be seen where there is the
power to exerts influence over prices where there is more than a single firm. In developed countries this may be controlled by
measures such as antitrust laws ands anti monopoly laws, however, this is an environment where there is a higher level of development and as such many developing nations do not
have the same level of protection. In many developing counties there is not the liberalisation of trade. Free markets may appear to
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