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Information Assymetries as the Main Source of Market Failure Affecting the Consumer

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  • Gheorghiu Gabriela

    („Ovidius” University of Constanta, Faculty of Economic Sciences)

Abstract

The reality of daily life gives us sufficient examples of situations in which individual decisions within free market do not automatically and warranted lead to a global economic optimum. Such a situation is denominated as “market failure”, both understood as “the failure of a more or less idealized system of price-market institutions to sustain “desirable” activities or to stop “undesirable” activities” [1], but also as any performance of the market which is considered less better than the best performance possible [2]. Specialized economic literature generally distinguishes four categories of market failures, namely: externalities, public goods, natural monopoly and information asymmetries. The present paper will focused on information asymmetries both from the point of view of generating causes and the effects involved on the consumers, and from the point of view of the possible solutions for rectifying them.

Suggested Citation

  • Gheorghiu Gabriela, 2013. "Information Assymetries as the Main Source of Market Failure Affecting the Consumer," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 494-499, May.
    • Handle: RePEc:ovi:oviste:v:xii:y:2012:i:1:p:494-499
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    References listed on IDEAS

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    1. Anonymous, 1949. "Council of Europe," International Organization, Cambridge University Press, vol. 3(4), pages 729-732, November.
    2. Anonymous, 1949. "Council of Europe," International Organization, Cambridge University Press, vol. 3(3), pages 551-552, August.
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    Cited by:

    1. Olivier Mesly & Hareesh Mavoori & Nicolas Huck, 2023. "The Role of Financial Spinning, Learning, and Predation in Market Failure," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(1), pages 517-543, March.

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    More about this item

    Keywords

    market failure; consumer; information asymmetries;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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