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Market Failure

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Geographical Immobility * Occurs when barriers between markets prevent factors of production moving from one area to another to find employment * Land is completely immobile and certain types of capital, for examples factory buildings, can only be moved with extreme difficulty and cost. * Usually geographical immobility refers to the ease or difficulty of labour moving between different areas of the country, or between countries.
Factors for geographical immobility:

1. Financial costs in moving home 2. Cost of selling house and removal expenses 3. Large regional variation in house prices which leads to a shortage of affordable housing. 4. Family and Social Ties 5. Immigration controls and language differences

Occupational Immobility * Arises when workers lack the skills to move between different types of employment, and because it would be very expensive and time consuming to train workers to have the necessary skills to switch between certain jobs. * Sometimes training is not available and some workers lack the aptitude of taking on different types of employment. * For example, workers made redundant in the coal mining industry lack the specific skills that are needed in growing industries such as the provision of financial services. * All this leads to unemployment and a waste of scarce resources, and contribute to market failure in factor markets.

Information Failure * Information failure occurs when people have inaccurate, incomplete, uncertain or misunderstood data and so make potentially 'wrong' choices. * There may well be a case for the government to intervene in the market in some way if information failures become serious.
Imperfect information can be caused by: * Misunderstanding the true costs or benefits of a product: E.g. the side effects of using tanning salons or painkillers *...

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