SAGE Reference - The SAGE Encyclopedia of Business Ethics and Society

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Market Failure

By: Barry M. Mitnick
In: The SAGE Encyclopedia of Business Ethics and Society
Edited by: Robert W. Kolb
Subject:Business Ethics (general), Business, Government, & Society
Keywords:actors; market failure; Pareto optimality

The concept of market failure refers to the numerous ways in which real markets fail to display the characteristics and performances of theoretical or perfect markets and/or to generate social outcomes that are analytically superior to those produced by other means of societal allocation. The modern conception of ideal market exchange and its perceived benefits dates at least to the classic work of Adam Smith in The Wealth of Nations (1776).

Characteristics of a Perfect Market

The concept of a perfect market is an abstraction. A perfect market is an exchange system featuring many buyers and sellers; actors who pursue rational self-interest with completely free choice and stable preferences; perfect information held by all the actors; goods that are all private in character in that their consumption ...

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  Mitnick, B. (2018). Market failure. In R. Kolb (Ed.), The SAGE encyclopedia of business ethics and society (Vol. 1, pp. 2174-2178). SAGE Publications, Inc., https://dx.doi.org/10.4135/9781483381503.n730
  
  Mitnick, Barry M. "Market Failure." In The SAGE Encyclopedia of Business Ethics and Society, edited by Kolb, Robert W., 2174-78. Thousand Oaks,, CA: SAGE Publications, Inc., 2018. https://dx.doi.org/10.4135/9781483381503.n730.
  
  Mitnick, B. 2018. Market Failure. In: Robert W. Kolb Editor, 2018. The SAGE Encyclopedia of Business Ethics and Society, Thousand Oaks,, CA: SAGE Publications, Inc. pp. 2174-2178 Available at: <https://dx.doi.org/10.4135/9781483381503.n730> [Accessed 17 Aug 2022].
  
  Mitnick, Barry M. "Market Failure." The SAGE Encyclopedia of Business Ethics and Society. Edited by Robert W. Kolb. Vol. 1. Thousand Oaks,: SAGE Publications, Inc., 2018, pp. 2174-78. SAGE Knowledge. 17 Aug 2022, doi: https://dx.doi.org/10.4135/9781483381503.n730.
  
  Mitnick, Barry M. (2018). Market failure In: Kolb, Robert W. (Ed.),Market failure The SAGE encyclopedia of business ethics and society Vol. 1. Thousand Oaks,, CA: SAGE Publications, Inc.; 2018:2174-2178. doi:10.4135/9781483381503.n730
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Characteristics of a Perfect Market

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