Market Failures
Not what you're looking for?
Give examples of at least two market failures and explain how they represent challenges to the free market understanding of business's environmental responsibilities.
Purchase this Solution
Solution Summary
The solution discusses two examples of market failures. References are included.
Solution Preview
Market Failure happens when resources have not been allocated properly according to their efficient use. When there is a market failure in the environment, the cause is usually the existence of negative externalities which means, the effects of the decision of a third party. A few of these market failures are pollution (air, water, etc.) and traffic congestion.
a. Pollution: As a result of the production process, some factories dispose their waste in rivers, streams and sometimes they produce by-products that pollute the atmosphere. Although the producers are aware of the impact of his decision and that the government may give sanctions to those who violate law, there are a few reasons why they continue what they are doing. Among these are as follows: being able to get away with it; they find the cost of disposing the waste too high; and that they are maximizing profits by minimizing their expenses and disposition of waste at least cost is the most efficient thing to do. These producers have ignored the fact that the true cost to society is much higher than the private cost that the producers can incur.
Using the framework of supply and demand, if society wishes to lessen the damage caused by pollution, they have to ...
Purchase this Solution
Free BrainMass Quizzes
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
Employee Orientation
Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
IPOs
This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.