Also occurs with services like street lamps because utility cannot be determined and confined to one person.
Market failure generally occurs when the incentives/profitability to supply a good arent strong enough, causing a failure of options in the market (market failure).
Generally 2 types, complete (missing market) and partial (wrong quantity is being produced).
There is also environmental market failure eg pollution
An example might be healthy food which is underpriced because its positive externalities are not considered by the buyers.
Ways a market fails:
- Businesses overproduce
- Businesses underproduce
- Consumers overconsume
- Consumers underconsume
This is what I have for GCSE Economics. I hope it helped.