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Economics (Boundless)
7: Market Failure: Externalities

7: Market Failure: Externalities

Last updated

Jan 4, 2021
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- 6.3: Price Elasticity of Supply
- 7.1: Introducing Market Failure

Boundless
Boundless

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Topic hierarchy

7.1: Introducing Market Failure
Market failure occurs when the price mechanism fails to account for all of the costs and benefits necessary to provide and consume a good.
7.2: Externalities in Depth
Negative externalities are costs caused by an activity that affect an otherwise uninvolved party who did not choose to incur that cost.
7.3: Government Policy Options
The government can respond to externalities through command-and-control policies or market-based policies.
7.4: Private Solutions
Private actors will sometimes effectively address externalities and reach efficient outcomes without government intervention.

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