TTO Market Failure

• Economie
• Middelbare school
• vwo
• Leerjaar 4

Government Intervention

Market failure

Learning objectives

• What constitutes a perfect market?
• What is market failure?
• What solutions to market failure exist?

How to reach the learning objectives

• Video
• Explanation of characteristics
  

• Discussion about Dutch housing market
  

About the magic of the market

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Characteristics of the
ultimate free market

Insight in the Dutch housing market

What problems do you see in the Dutch housing market?

When do we speak of market failure?

1. The existence of externalities (positive and negative)
2. Lack of public goods: goods that would not be provided at all in a free market.
3. When the price is higher/ lower than socially accepted.
4. Imperfect competition.
   

What solutions do you see for market failure in the housing market?

Solutions to market failure

1. Price floors and ceilings
   Price floor: protection producer
   Price ceiling: protection consumer
   
2. Taxes and subsidies
   Taxes: increase price
   Subsidies: decreases price
   
3. Protection and quota
   Protection: barrieres to trade
   Quota: maximum to production