A very good piece on market failures.
And to add my tuppence worth.
The technical term “market failure” is best understood as this current market has failed to deal with this current problem. That could be because there is no market in this. Or the problem is external to market forces. Or, even, because this problem is not amenable to solution by markets.
The technical claim being made is that this problem is not currently being solved by markets.
But the colloquial meaning is purely that last – this problem is not amenable to solution by markets. And in that difference we get an awful lot of disaster. Because “these markets, these here right now, need a bit of tweaking to work” is different from “these markets, these here right now, must be abolished and replaced by bureaucratic dictat”.
The market for lighthouses works just fine with the added tweak of being able to charge lights dues. It’s not necessary to nationalise them into the Coastguard…..