Market failure is the result of imperfection.market instruments and institutions. At the same time, there is an inability of these components to satisfactorily solve social and economic issues that are important to society. If, for any reason, the basic elements of the market mechanism, when operating in an autonomous mode, do not ensure social efficiency, then in this case there is a need for government intervention in economic development. About the fiasco of trade relations speak in the case when they do not contribute to the rational allocation and use of resources.
Market failures are obstacles that prevent an economy from achieving social efficiency.
As a rule, there are four ineffective situations. They point to market failures. These include imperfect (asymmetric) information, monopoly, public goods, external effects.
It should be noted that the market is not capableto lead to social efficiency in the event that the activities of some consumers or producers affect the well-being of other people. When this influence is positive, there are external benefits. If the impact is negative, then external costs are generated. They, in turn, are associated with the manufacture of any good. Public costs include private spending and external effects of production.
As a rule, when market failures occur,economic relations are entering the state. Problem solving is carried out by various means. Thus, the state pursues an antitrust policy, restricts the manufacture of products with negative external effects. This stimulates the production and consumption of economic benefits with positive effects.
Indicated directions of stateactivities are to a certain extent the lower limit, in accordance with which power intervenes in the market. However, today the state has broader economic functions and is able to more effectively eliminate market failures. Among the main functions of government are the following: the introduction of unemployment benefits, infrastructure development, the establishment of various types of benefits and pensions for low-income citizens and others. It should be noted that a small number of these events has the properties of exclusively public goods. Most of them are not intended for collective, but individual consumption.
State, conducting antitrust andanti-inflationary policies, seeks mainly to reduce unemployment. In recent years, the authorities have been taking an increasingly active part in the management of structural changes, stimulating and supporting scientific and technical progress, trying to maintain a high level of development and national economy. In conjunction with foreign economic and regional regulation, these measures indicate the degree of importance of the role of the state in the economy. During the 20th century, the apparatus of power sought to effectively solve two problems interconnected with each other. First of all, the state tried to ensure stable operation of the market. Secondly, the power apparatus tried, if not to solve, then to alleviate acute social and economic problems. All these actions were aimed at preventing market failures.
At the same time, as many analysts,the rapid growth of state regulation cannot continue uninterruptedly. Thus, in a market economy, the functions of the apparatus of power have certain limitations.
