A Level Economics - Market Failure

This unit aims to provide some examples of how to teach some of the quite challenging topics around market failure in an effective manner that enhances understanding and so develops confidence.

The key terms and questions that are addressed can be summarised as follows: 

  • What is market failure?
  • Types of market failure.
  • Forms of market correction (taxation, subsidy, pollution permits, property rights, regulation).
  • Externalities (positive and negative).
  • Public goods – non rival and non-excludable characteristics
  • Income inequality
  • Imperfect information
  • Asymmetric information
  • Labour immobility
  • Government failure

The resources which support the lessons and activities comprise:

  • Resource 1 - A worksheet covering the market failures of labour immobility, inequality in the distribution of income and imperfect knowledge.
  • Resource 2 - A further activity on taxi-licensing to reinforce information failure.
  • Resource 3 - Negative externalities - how tradable permits may be used as a form of market correction
  • Resource 4- Activity on congestion
  • Resource 5 - Activity on public goods
  • Resources 6 and 7 – Key definitions of market failure

 

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