15. Causes of market failure include a. externalities and market power. (b) market power and incorrect…
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Question “15. Causes of market failure include a. externalities and market power. (b) market power and incorrect…”
Answer
15) Market power and externalities
Externalities can lead to over or under provision of goods, and vice versa. The result is that there is no free rider problem and everyone is willing to pay for goods or services. Monopoly, which is market power, leads to profit extraction and under supply of goods or services.
Conclusion
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