In microeconomics, market failure is characterized by misallocation of resources and resulting Pareto inefficiency. Just as the invisible hand falters, unregulated markets are incapable of solving all economic problems. In laissez-faire economics, primarily monopolistic, perfect competition, and oligopoly market models are expected to efficiently allocate resources for the “social benefit” of society. However, individualistic and selfish private interests divert public benefits, thus prompting government intervention to correct the imperfection which can lead to disastrous economic impact. While government corrective intervention policies may not necessarily address the underlying imperfection induced by private sector inefficiency, it still becomes a necessary remedy to benefit the broader public if private entities do not allocate efficiency . Furthermore, as the largest contributor to gross domestic product, inadequate and untimely corrective measures could signal the failure of both private and public interests. The effectiveness of state-designed policies and mechanisms in market intervention are critical to correcting any perceived market failure. Intervention, however, does not guarantee the effective remedies expected by the economy and could lead to deeper market failures if regulations “crowd out” the private sector, but it represents the viable approach to addressing market failure. Causes of market failure In the analysis of market failure, a distinction should be made between partial and complete market failures. While the latter implies a functional market with an ineffective function, the former describes a completely non-functional market with the inability to supply the market with the required goods or… middle of paper… intervention in market economies always functions in a effective. However, given that its role and responsibility in ensuring the well-being of its citizens are intrinsically necessary, intervention, support, collaboration and corporation are always necessary for the proper management and functioning of economic markets. Works Cited Works Cited Rosen, Harvey. Public Finance, fifth edition. New York: Mc Graw Hill Book Co. 2005. PrintStiglitz, Joseph. Public Sector Economics, 3rd Edition. New York: Norton & Co., 2000. PrintTullock, Gordon. “The no-prisoner's dilemma”. Journal of Economic Behavior and Organization, 2005(2): 23-45.Winston, Clifford. Government failure and market failure Microeconomic policy research and government performance. United States: Brookings Institution Press.2006.Print