INTRODUCTION
A market is an exchange institution that serves society by organising economic activity.
The market relies on bilateral exchanges between investors and companies, workers and employers, producers and consumers. The concept of the market consists in the diversity of individual entities who take part in it. These entities choose and express, trough economic exchanges, their preferences concerning the possibilities of rare resources' exploitation.
The market system is considered when a set of competitive markets generates an efficient allocation of resources between and within economies.
However, it is commonly known that market has some limits that we can call "market failures".
Market failure is a situation in which markets do not efficiently organize production or allocate goods and services to consumers. To economists, the term would normally be applied to situations where the inefficiency is particularly dramatic, or when it is suggested that non-market institutions (such as public policing and fire fighting) would be more efficient and wealth-producing than their private alternatives. On the other hand, many market failures are situations where market forces do not serve the perceived public interest.
There are three main types of market imperfections. First of all, we will see the externalities, and then we will discuss the difficulties due to public propriety. To finish we will deal with "non-exclusion and non-rivalry" problems.
I/ Externalities
1) Definition:
The first reason of market place fail is due to externalities. Giving a clear definition of this concept is a hard task. According to Pierre Picard, externalities are ?m ...