Oh, wow, oh, oh, oh, wow, oh, oh, wow.

Oh, wow.

Oh, my. Hello, you're listening to The Science of Everything podcast, episode 19, market failure.

This episode continues on from the analysis of market performance that we conducted in episodes

12 and 16, so it might be a good idea to have listened to those first, because you'll get more

out of this one. In this episode, we look at situations when markets fail to produce optimal outcomes,

hence market failures. So first, I'll define exactly what a market failure is, because there is

a specific definition, and then I'll look at the canonical big four examples of market failure,

which are market power or monopolies, externalities, public goods, and asymmetric information. And then at the end,

I just want to take a brief look at transaction costs, which are not exactly the same as the

other four examples of market failure, but I think are still very relevant to this analysis.

Also, I want to say that in this podcast, I'm just going to have a very brief introduction

to each of these areas or examples of market failure.

Probably in the future I'll do a separate podcast on each of these

and have a more detailed look at the ways that they can be rectified or improved.

But here I just want to introduce the basic idea to you.

So first of all, what is a market failure?

Well, in economics, the term market failure has a very

precise meaning. It does not simply mean a dissatisfaction with market outcome. So if we see

some outcome or some situation that has occurred in the economy that we don't like, say people

are producing and selling music that we don't like or magazines we don't like.

Or some people are much richer than others and we don't like that or something along those lines.

...