Editing Market failure (section)

==Interpretations and policy examples==
The above causes represent the [[mainstream economics|mainstream]] view of what market failures mean and of their importance in the economy. This analysis follows the lead of the [[Neoclassical economics|neoclassical]] school, and relies on the notion of [[Pareto efficiency]],<ref name="mises">{{cite web
  | last = MacKenzie  | first = D.W.  | title = The Market Failure Myth
  |publisher=[[Ludwig von Mises Institute]]
  | date = 2002-08-26  | url = https://mises.org/library/market-failure-myth
  | access-date = 2008-11-25 }}</ref> which can be in the "[[public interest]]", as well as in interests of stakeholders with [[Equity (economics)|equity]].<ref name="mankiw"/> This form of analysis has also been adopted by the [[Keynesian]] or [[new Keynesian economics|new Keynesian]] schools in modern [[macroeconomics]], applying it to [[Léon Walras|Walras]]ian models of [[general equilibrium]] in order to deal with failures to attain [[full employment]], or the non-adjustment of prices and wages.

Policies to prevent market failure are already commonly implemented in the economy. For example, to prevent information asymmetry, members of the New York Stock Exchange agree to abide by its rules in order to promote a fair and orderly market in the trading of listed securities.  The members of the [[NYSE]] presumably believe that each member is individually better off if every member adheres to its rules – even if they have to forego money-making opportunities that would violate those rules.

A simple example of policies to address market power is government antitrust policies. As an additional example of externalities, municipal governments enforce building codes and license tradesmen to mitigate the incentive to  use cheaper (but more dangerous) construction practices, ensuring that the total cost of new construction includes the (otherwise external)  cost of preventing future tragedies.  The voters who elect municipal officials presumably feel that they are individually better off if everyone complies with the local codes, even if those codes may increase the cost of construction in their communities.

[[CITES]] is an international treaty to protect the world's common interest in preserving endangered species – a classic "public good" – against the private interests of poachers, developers and other market participants who might otherwise reap monetary benefits without bearing the known and unknown costs that extinction could create.  Even without knowing the true cost of extinction, the signatory countries believe that the societal costs far outweigh the possible private gains that they have agreed to forego.

Some remedies for market failure can resemble other market failures.  For example, the issue of systematic underinvestment in research is addressed by the [[patent]] system that creates artificial monopolies for successful inventions.