Market failures

The free market does not work perfectly and there are some market failures that makes the market economy imperfect.

Market failures means that resources not are allocated optimally in an economy. Market losses leads to inefficiencies in the economy of a country if nothing is done to overcome the failures that causes them. A market should theoretically maximize the welfare of a country, market failures means that this is not possible without regulation of the market economy.

Market failures is monopoly, public goods, externalities and incomplete information.