Market failure occurs when the allocation of goods and services by a free market fails to achieve an efficient outcome that maximizes social welfare or when the market does not produce the socially optimal quantity or distribution of goods and services. Market failures can result from various factors, such as externalities, public goods, imperfect competition, information asymmetry, and unequal distribution of resources.

When markets don’t work 🚨📉 Externalities, monopolies, and inefficiencies break the system.

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