Spot price of West Texas Intermediate in relation to the price of Brent Crude. Historically price differences between Brent and other index crudes have been based on physical differences in crude oil specifications and short-term variations in supply and demand.
When does market failure occur? Whenever resources are not allocated efficiently. ie. total surplus is not maximised. What are the main types of market failure?
But either way, if a market failure exists the outcome is not Pareto efficient. Most mainstream economists believe that there are circumstances (like building codes or endangered species) in which it is possible for government or other organizations to improve the inefficient market outcome.he existence of a market failure is often the reason that self-regulatory organizations, governments or supra-national institutions intervene in a particular market.