Externality, Market Inefficiency & Regulation

Dr. Chitra Saruparia

                Faculty of Humanities & Social Sciences
                      National Law University, Jodhpur.
chitrasnlu@gmail.com
9352777295
Market Failure: It is a situation in which a free market fails to allocate resources efficiently.

Causes :

Imperfect Markets
-Asymmetric Information
-Externality 
-Public Goods

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 Externality & Market Inefficiency

Externalities refers to situations when the effect of production or

consumption of goods and services imposes costs or benefits on others
which are not reflected in the prices charged for the goods and services
being provided. (OECD)

Negative Externality

Positive Externality
Welfare Economics : A Recap
Economics of Negative Externalities
Economics of Positive Externalities
Public Sector Remedies for Externalities:

Command & Control Policies

Corrective Taxes & Subsidies
Tradable Pollution Permits
Case Studies:

Why is Gasoline Taxed So heavily?

Externality of SUVs
Technological spillovers & Patent Protection

Food for Your Thought

Is Covid -19 an example of market failure?

Thank You
for Your attention