The term used to describe a situation in which markets fail to allocate resources efficiently is called a

The term used to describe a situation in which markets fail to allocate resources efficiently is called market failure. It happens when goods and services are inefficiently distributed in the free market. Market failure is the opposite of non-rivalrous consumption, where goods and services are efficiently allocated in the open market. In such a situation, personal incentives for rational traits don't bear good results. Market failure is caused by both negative and positive externalities that involve a third-party effect that results from the production or consumption of a service or commodity. Other causes are imperfect market information, availability of public goods, and market control.