Give three different types of market failures

Failure of free markets to allocate resources efficiently described as a market failure. They include

• The missing markets. Failure of markets to form results due to many people failing to meet their wants and needs. The needs may include, street lighting, defence, highways, and public goods. Government should correct the failure to enable the citizens meet their needs satisfactorily.
• The market forces of capitalism which result in power concentration. Market failures gives rise to a concentration of power among a few people instead of power dispersion. This results in the exploitation of the poor and the needy due to market economy distortions.

The government should intervene and regulate the markets through implementation of policies in order to safeguard the interests of the people.

• The asymmetry of information. Consumers are always provided with varied choices of services and products by the markets. The quality of these products and services is hard to determine in advance. Moreover, this results in information asymmetries where the consumer goes blindly without knowing the quality of service being consumed.

The government should ensure information dissemination is done uniformly; devoid of bias to avoid incidences of market failures.