Track B · MarketsNode B3
When markets fail
Layer 1 · Pocket
~ 30s readThe thirty-second answer
What is this?
Externalities, public goods, asymmetric information, market power. Memorise these four; almost every real market failure is a combination.
Why should I care?
Knowing the failure modes by name lets you diagnose why a market isn't working — instead of either defending it on principle or condemning it on principle. The cure for each is different.
The four failure modes · with examples
- Externalities
- pollution, vaccines
- Public goods
- defense, research
- Asymm. information
- insurance, used cars
- Market power
- monopoly, network effects