Market failure
situation in which the allocation of goods and services by a free market is not efficient and can be improved upon from the societal point of view, often leading to a net loss of economic value
In neoclassical economics, market failure is a situation in which the allocation of goods and services by a free market is not Pareto efficient. Common causes of market failure are information assymmetries, externalities, natural monopolies and public goods. Market failure is one of the reason why a state regulates a market to improve the allocation.
