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?
There are two broad reasons for the government to interfere with the economy: the promotion of efficiency and equity. 1  Government policy can be most useful when there is market failure.  Definition of market failure: a situation in which a market left on its own fails to allocate resources efficiently.