Network
Baca Juga: Kunci Jawaban Bahasa Inggris Kelas 10 SMA Halaman 36 Semester 1 Kurikulum Merdeka, Words or Phrases
One prominent cause is externalities, where the impact of economic activities spills over to affect third parties not directly involved in the transaction. For instance, pollution from a manufacturing plant may harm the health of nearby residents, leading to an unaccounted cost that distorts the market's efficiency.
Reference to the works of Nobel laureate economist Arthur Pigou sheds light on this issue, as he proposed the concept of Pigovian taxes to internalize externalities.
Implementing taxes on activities with negative externalities, such as carbon emissions, can help align private costs with social costs, encouraging producers to consider the broader impact of their actions.
Paragraph 2
Another factor contributing to market failure is the existence of public goods, which exhibit non-excludable and non-rivalrous characteristics. Traditional markets struggle to efficiently allocate public goods because individuals can benefit from them without contributing.
Economist Paul Samuelson's seminal work on public goods highlights the need for government intervention to provide these goods, as the private sector lacks the incentive to produce them.
Public goods, such as national defense and clean air, necessitate collective action, and government intervention through funding or direct provision becomes imperative to ensure equitable access.
By recognizing the unique nature of public goods and establishing appropriate mechanisms for their provision, societies can mitigate market failure in this specific context.
Paragraph 3
