Market Failures in the Time of COVID-19
Explore the impact of COVID-19 on global economies, highlighting market failures caused by externalities, monopoly, and information asymmetries. Learn about negative and positive externalities, public goods challenges, and market control issues.
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Presentation Transcript
THE ECONOMICSOF COVID 19 Anjana B.S. Research Scholar Department of Economics University of Kerala Dr. Prasad A.K. Professor Department of Economics University of Kerala
COVID-19 Adversely affected all sectors of the economies around the world Evidence of the failure of market
MARKET FAILURE IN THE ERA OF COVID 19 Market failure is an economic situation defined as inefficient allocation of goods and services in the free market. Occur due to the presence of externalities, monopoly, information asymmetries and public goods.
EXTERNALITIES Market fails to fully account for costs and benefits Negative externalities exist when actions of an individual or group incur costs for non participating parties Eg. Eating or drinking outdoors during the pandemic Arises because property imperfectly defined or enforced rights are
NEGATIVE THE MARKET DUE TO GROUP DINING IN THE RESTAURANTS DURING PANDEMIC EXTERNALITY ARISING IN
Positive externalities exist when actions of an individual or group generate benefits for non participating parties Eg. Provision of Covid 19 vaccines
PUBLIC GOODS Goods excludable Results in free rider problem Eg. Some individuals try to free ride of others who are adhering to Covid 19 protocols without having an incentive to pay to flatten the curve. Shortage of public good which are non-rival and non-
ASYMMETRIC INFORMATION Some or all of the participants do not have perfect knowledge, or when one participant has more information than the other. Eg. Delay in reaction transmission in other countries and become highly vulnerable later, Not revealing disease conditions by infected individuals. to the virus
MARKET CONTROL Market control on the supply side allows sellers to determine demand price. Eg. Dominance of few manufactures in the covid vaccine industry
SOLUTIONS Government intervention Providing information Role of personal responsibility and integrating adequate
