2.4 Market Failure

Reasons for market failure
Positive and negative externalities, with appropriate diagrams
Short-term and long-term environmental concerns, with reference to sustainable development
Lack of public goods
Underprovision of merit goods
Overprovision of demerit goods
Abuse of monopoly power
Possible government responses
Legislation
Direct provision of merit and public goods
Taxation
Subsidies
Tradable permits
Extension of property rights
Advertising to encourage or discourage consumption
International cooperation among governments