Modern finance · 1950s–1990s
1958
Market failure gets a name
Francis Bator's "The Anatomy of Market Failure" gathers the reasons markets go wrong.
In 1958 Francis Bator brought together externalities, public goods and monopoly as reasons a free market may not reach the best outcome.
💡 Why it made sense then
Economists needed a clear account of when markets work well and when they don't.
Ideas it gave us
- 🏗️ Market failure
Market failure is when a free market, left alone, doesn't produce the efficient outcome. Causes include externalities, public goods, monopoly power and information asymmetry.
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