Technological University of Peru

Failures in the
market
INFOGRAPHIC

definition of market failure

It is a situation that occurs when the market is not capable of allocating
resources efficiently.

occurrence
factors
• The externalities
• Imperfect competition
• Asymmetric information
• The use of public goods
• Incomplete markets

the externalities
It is an uncompensated effect of a person's actions on the well-
being of a third party.
They may be:
• Negatives of consumption
• Production negatives
• Consumption positives
• Production positives

MARKET FAILURE
Also known as imperfect competition. It occurs when individual
sellers have the ability to significantly affect the market price of their
products or services.
Types of imperfect competition:
• Monopoly
• Oligopoly
• Monopolistic Competition

Public goods
They are goods that are neither exclusive nor rival in consumption, it cannot be
prevented that people use the public good and the use of this good per person does
not reduce the capacity of the other in the use of the same good.

Asymmetric information
It is the differentiation gap between one person and another with respect to
access to information, this is called asymmetric information. Because this
information is so prevalent, in recent decades economists have devoted effort
to studying its effects.

Incomplete
markets
It is another market failure, it occurs when private markets do not supply a good
or service, even when the cost of supplying it is lower than what consumers are
willing to pay, a complete market would supply all the goods and services,
whose cost of supplying it was lower than the price of the good or service. It
occurs more frequently in the insurance and capital markets.

student: Gabriela Regina Zapana Chokemamani