Monopolies – these are often viewed as allocating resources inefficiently as the producer is able to charge higher prices due to being the only producer in the market
Imperfect knowledge of the market can also cause market failure
Immobility of Factors of Production
These can lead to market failure and may be due to:
- Occupational immobility – this occurs when there are barriers of mobility between different jobs and different industries
- Geographical immobility exists when there are barriers to people of moving to different locations
Inequalities
In market economies an individuals ability to consume goods and services is dependent on their income / wealth
An uneven distribution of income / wealth within an economy can result in an unsatisfactory allocation of resources and therefore market failure
In many developing countries income inequality is great therefore resulting in misallocation of resources
