Cause Of Market Failure

Market failure

Market failure is not an efficient market allocation of goods and services. For economists, the term is usually used for ineffective situation is particularly important when the ability or the more efficient non market institutions and create wealth is better than when private selection. On the other hand, market failure is often used to describe the market forces to meet the public interest（John O. Ledyard (2008).）. This view focuses on the mainstream of economics. Economists use the model theory to explain or understand the situation, the two main causes of market failure to convey the cost or profit price discomfort cut, thereby affecting the individual economic decision-making mechanism of the market.

Market failure

Because the government than individuals or families have more information, more can understand the meaning of personal education investment ratio, thus better insight into the future, in investment in education decision is more sensible.

Public goods

“The public goods are available to members of society to enjoy common items, which have non-exclusive and non-competitive characteristic.” (Scottish Qualifications Authority (2013）).

Public goods include flood control systems street lighting and so on. To be more specific, the national defense is one of the classical public goods, which brings safety to people. One`s enjoyment will not affect the others. This may occur the free-rider problem.

The free rider problem occurs when people benefit from resources, goods, or services do not pay for them, it will results in an under-provision of those goods or services.（Baumol, William (1952).）

As a public organization the government 's aim is to maintain social public interest of citizens and improve social benefits, is not for profit organization. So the government need to provide public goods.

Imperfect

Social welfare refers to the state in accordance with the law for all citizens generally provide to ensure a certain standard of living and improve the quality of life as far as possible the funds and services of social insurance system.

In the recent 10 years, abuse of the welfare system, the British government 's attention, and take measures to reform, change from negative to positive, so as to promote the economic development of a wide range of social welfare refers to the improvement of the living standards of the members of the social policy and social services, to solve the general welfare of all members of the society.

Including the content of social welfare is very extensive, not only including life, education, health care and welfare benefits, including transportation, entertainment, sports, etc. enjoy treatment. Social welfare is a kind of service policy and measures, which aims at improving the wide The material and spiritual life of social members, to get more enjoyment. At the same time, the social welfare is a kind of responsibility, is a kind of social function to protect and maintain the organism vitality in the foundation of social security. So the welfare has become including life, health and education, a