Market Failure In Singapore

Types of market failure:

Market failure refers to a situation where the price mechanism leads to inefficiency in the allocation of scare resources and grievance lacking of social welfare. (https://www.tutor2u.net/economics/reference/introduction-to-market-failure)

First of all, the first type of market failures in Singapore is the production and allocation inefficiency. Production and allocation inefficiency are the situations where those organizations failed to produce and allocate the products and services to the consumers with the scarce resources that are owned privately by the firms. Singapore is well-known country which has smaller in land size, almost no natural resources in the country and estimated with 5.5 million of population. Therefore,

This means that the market failed to control the exploitation of monopoly power which is happening in Singapore. Market sovereignty by monopolies has led to the high price of goods and services in the market and consumers’ welfare have been damaged. For an example, in Singapore, most of the high price in goods and services are affected by the monopolies power and some of the low income household families cannot afford the high price in goods and services. Therefore, in this case, government intervention should be imposed in it to ensure that goods and services can be afforded by every community.

Moreover, the free market system in Singapore has a failure in missing market. For an example, private sectors in Singapore cannot supply pure public goods and services that are needed by consumers due to the profit. Hence, government intervention is important in this issue to protect the consumers’ right with enough needs and wants to carry on their daily

These negative externalities are some effects caused by the actions of consumers and producers and affected the third parties. Third parties can be individuals, organizations; community or society will be benefit or suffer from the actions of producers and consumers. For an example, some producers failed to follow the rules by polluting the environment while processing of goods and services. Hence, these actions have led to some negative results and affect the health of the Singaporean. Some of the negative externalities caused by the society of Singapore are the air pollution, external cost for cleaning the litters and the chewing gums, water pollution caused by some factories and so on. In consequence, the government of Singapore should impose a tax to those who constitute the negative externalities. This can be known as “making the polluter to pay for their actions”. This action can reduce the existence of negative externalities in Singapore. (