What is Market failure?
[[File:Godorf Cologne Rhineland-Refinery-Cooling-Towers-during-demolition-02.jpg|thumb|[[Factory|Factories]] and [[Refinery|refineries]] provide jobs, but they also [[Pollution|pollute]] the [[environment]]. In economics, this is an example of market failure.]] In [[neoclassical economics]], '''market failure''' is a situation in which the allocation of [[Good (economics)|goods]] and [[Service (economics)|services]] by a [[free market]] is not [[Pareto efficiency|Pareto efficient]]. Common causes of market failure are [[Information asymmetry|information assymmetries]], [[Externality|externalities]], [[Natural monopoly|natural monopolies]] and [[Public good|public goods]]. Market failure is one of the reason why a [[Economic interventionism|state regulates]] a [[market]] to improve the allocation. {{stub}} [[Category:Economics]]