Market failure

Factoriesandrefineriesprovide jobs, but they alsopollutetheenvironment.In economics, this is an example of market failure.

Inneoclassical economics,market failureis a situation in which the allocation ofgoodsandservicesby afree marketis notPareto efficient.Common causes of market failure areinformation assymmetries,externalities,natural monopoliesandpublic goods.Market failure is one of the reason why astate regulatesamarketto improve the allocation.