Market power and externalities are two possible causes of market failure.

Name: Market power and externalities are two possible causes of market failure.
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Question

Quizplus · Accepted Answer

Market power, where a single firm or a small number of firms can control market prices, and externalities, where costs or benefits of a transaction are not fully borne by the buyer or seller but affect third parties, can both lead to market outcomes that are inefficient from a societal perspective, thus causing market failure.

Market Power and Externalities Are Two Possible Causes of Market