Market Failure Essay

848 WordsOct 7, 20134 Pages
There are various ways in which a market failure occurs. A product might be under produced or not even produced at all and when this happens, their resources have been under allocated to the production of that product. If the opposite occurs and a product is over produced then its resources have been over allocated to its production. Market failure implies a loss of allocated efficiency. McConnell, Brue and Flynn define market failure in our text book as “the inability of a market to bring about the allocation of resources that best satisfies the wants of society; in particular, the over allocation or under allocation of resources to the production of a particular good or service because of externalizations or informational problems or because markets do not provide desired public goods”. Public Goods and Service -- Schools, Highways and Streets, Fire and Police Protection, National Defense, Prisons is the area I have chosen for my paper. Because these areas mainly fall under governmental provision and regulation they are simply not provided to society as a whole by the private market. Privatizing prisons has once again become acceptable, “the private prison industry, which has grown by 350 percent in the last 15 years (Johnson, 2012)”. There is still much to be debated about the privatization of prisons once again, as the profit margin isn’t in the care or service they provide but rather in the number of inmates they house. Emergency services such as Fire and Police protection are areas that the market fails to give the desired quality of output and desirable price. Both of these services are pretty much wholly government run and controlled. I did find a blog article that gave the following information which I think merits at least a look for those counties, cities and states struggling to pay the bills for these services: “Chatham County, Georgia,

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