AS Economics - Market Failure

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Maths97Student
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Hi, just wondering if market failure basically just means 'when consumer satisfaction is not maximised'?

If market failure is when resources are not used in the most efficient way, ie allocative efficiency is not achieved, and allocative efficiency is when consumer satisfaction is maximised, surely market failure is simply when consumer satisfaction is not maximised?
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Mike_123
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(Original post by Maths97Student)
Hi, just wondering if market failure basically just means 'when consumer satisfaction is not maximised'?

If market failure is when resources are not used in the most efficient way, ie allocative efficiency is not achieved, and allocative efficiency is when consumer satisfaction is maximised, surely market failure is simply when consumer satisfaction is not maximised?
Yeah it refers to the efficient allocation of resources and not achieving a Pareto optimum. It doesn't have to be consumers. It could be a fishing firm that is affected by the negative externalities that pollution creates.
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