Market failure
The Green Book, Central Government Guidance On Appraisal And Evaluation, Published by HM Treasury in 2020, suggests: ‘Market failure occurs where, a market is unable to function fairly according to the economic ideas of efficient markets, from a Green Book perspective which looks beyond simply economic efficiency this means the market is unable to provide satisfactory levels of welfare efficiency.’
The 2018 Green Book stated that market failure is: ‘…where, for one reason or another, the market mechanism alone cannot achieve economic efficiency.’
The Industrial Decarbonisation Strategy published by HM Government in March 2021, states: ‘Market failure is where the market mechanism alone cannot achieve economic efficiency. Economic efficiency is achieved when nobody can be made better off without someone else being made worse off. Economic efficiency enhances social welfare by ensuring resources are allocated and used in the most productive manner possible. One potential cause of inefficiency is when the private returns to an individual or firm from carrying out a particular action or activity differs from the returns to society as a whole, meaning there are external costs or benefits.’
Global Warming of 1.5 ºC, Glossary, published by the Intergovernmental Panel on Climate Change (IPCC) in 2018, defines market failure as: ‘When private decisions are based on market prices that do not reflect the real scarcity of goods and services but rather reflect market distortions, they do not generate an efficient allocation of resources but cause welfare losses. A market distortion is any event in which a market reaches a market clearing price that is substantially different from the price that a market would achieve while operating under conditions of perfect competition and state enforcement of legal contracts and the ownership of private property. Examples of factors causing market prices to deviate from real economic scarcity are environmental externalities, public goods, monopoly power, information asymmetry, transaction costs and non-rational behaviour.’
[edit] Related articles on Designing Buildings
Featured articles and news
Amendment to the GB Energy Bill welcomed by ECA
Move prevents nationally-owned energy company from investing in solar panels produced by modern slavery.
Gregor Harvie argues that AI is state-sanctioned theft of IP.
Heat pumps, vehicle chargers and heating appliances must be sold with smart functionality.
Experimental AI housing target help for councils
Experimental AI could help councils meet housing targets by digitising records.
New-style degrees set for reformed ARB accreditation
Following the ARB Tomorrow's Architects competency outcomes for Architects.
BSRIA Occupant Wellbeing survey BOW
Occupant satisfaction and wellbeing tool inc. physical environment, indoor facilities, functionality and accessibility.
Preserving, waterproofing and decorating buildings.
Many resources for visitors aswell as new features for members.
Using technology to empower communities
The Community data platform; capturing the DNA of a place and fostering participation, for better design.
Heat pump and wind turbine sound calculations for PDRs
MCS publish updated sound calculation standards for permitted development installations.
Homes England creates largest housing-led site in the North
Successful, 34 hectare land acquisition with the residential allocation now completed.
Scottish apprenticeship training proposals
General support although better accountability and transparency is sought.
The history of building regulations
A story of belated action in response to crisis.
Moisture, fire safety and emerging trends in living walls
How wet is your wall?
Current policy explained and newly published consultation by the UK and Welsh Governments.
British architecture 1919–39. Book review.
Conservation of listed prefabs in Moseley.
Energy industry calls for urgent reform.