One of the main topics of economic theory is market failures and the role of the state in economic development. It makes it possible to understand why the market and society cannot function normally without the intervention of managerial forces.
Market failures are formed due to the imperfection of market institutions and instruments. At the same time, one of the main points is that a perfect market economy is not able to solve socio-economic issues, which are very important for society. That is, a market that works autonomously will simply not take care of ordinary citizens, since it will not have an incentive for this.
Government intervention
This is where government intervention is needed. If trade relations do not allow a rational distribution of funds between citizens, it is necessary to create conditions for this. For example, free education. If the market exists autonomously, people may not be provided with knowledge, since it is not profitable to train everyone at once. Better to learn literacy only those who have money.
It can be concluded that market failures are peculiar obstacles that do not allow society to achieve efficiency. As a rule, four main and several additional failures are distinguished. These are external effects, public goods, monopoly and asymmetric information.
