We have already used Hume's meadow as an example of market failure. Other market failures include public goods and monopoly. The purpose of this chapter is twofold. First, we want to show why the private property system tends to generate what most people seem to regard as great wealth. Second, we want to identify the sources of market failure.
Part one describes the system.
Part two discusses the public goods problem. Part four identifies other sources of market failure. Part five discusses the special problem of monitoring that arises when agents are hired to decide on the supply of public goods. A word of caution is perhaps in order. The economic literature contains much debate on the idea of market failure.