Economics of Market Failure
There is a clear economic case for government intervention when some form of market failure arises. Basically, market failure occurs when markets do not bring about economic efficiency such that either too few or too many resources are being devoted to the production &/or consumption of goods/services.. Government intervention occurs when markets are not working optimally i.e. there is a Pareto sub-optimal allocation of resources in a market/industry. In simple terms, the market may not always allocate scarce resources efficiently in a way that achieves the highest total social welfare where social demand (MSB) equals social supply (MSC).
Organizer: Public, Private & Merit Goods
Download the following organizer from the power point presentation delivered in class. This chart effectively compares the different characteristics of private, public and merit goods.
On-Line Presentations
The presentations below review market failure and the related concepts and principles needed to gain a firm grasp of this key topic. It is strongly suggested that you review each of the presentations* at your own pace so as to reinforce your understanding of this important topic in the IB syllabus.
Case Study: Asymmetric Information and U.S. Health Care
The introduction of Obamacare (The Affordable Health Care Act) in the United States was supposed to bring some equity and semblance to the health insurance market. Instead, many problems that have existed in the past, complicated insurance rules and regulations, excessive hospital fees and co-pays/deductibles etc... still plague the U.S. health care sector. Read the following article and comments that follow for some insight into this classic case of asymmetric information in the health care market.
Updates on 'Obamacare' (Oct 25-2016)
Review: Revision - Market Failure
For a concise and thorough review of market failure obtain and review this reading.
Tesla and Pollution Credits
Read this article addressing how Tesla is earning revenue from its competitors because of the clean energy credits being earned via its market leading battery technology.
International Agreements and Climate Change
Observe the following videos (shown in class) addressing the various international efforts to combat climate change.
What would make the COP26 climate conference a success? (news article - CBC)
