Market Failure: Reasons and Its Accomplishments

Abstract

In free market economy; at present there are lots of reasons of market failure. The aim of this paper is to find out those reasons and analyses the probable solutions for recovering those market failures. This paper shows that market failure mostly resulting from an incomplete information as well as information asymmetry between providers and consumers, the effect of externalities, imperfect information, imperfect mobility of factors of production, income inequality, market dominance, negative externalities, positives externalities, public goods and the divergence between social and private time preference rates. Lot of solutions have been found out to overcome the market failure includes Tax on Negative Externalities, Subsidy on positive externalities, Laws and Regulations, Buffer stocks, Government advertising and campaigns. The conceptual framework has been developed by finding and evaluating the market failure overcoming factors where the free market economy can reach to the market equilibrium position from the market disequilibrium condition. Thus, the recommendations of this research will be helpful for home govt. and Businessman to keep the open market in equilibrium position.