Source: EconLog
by Jon Murphy
“Market failure, which I am defining here as a market not reaching the equilibrium condition where quantity supplied equals quantity demanded, is ubiquitous. Every time we walk into stores, we see market failure happening: shelves and shelves of goods sit, waiting for buyers. This is excess supply (surplus), a market failure. If the market were in equilibrium and perfectly clearing, then when you (the marginal consumer) walk into a store, you should see only the good(s) in the precise quantity you want to buy at the price that precisely equals your willingness to pay for the marginal unit. Nothing else should remain. … Obviously, such an outcome does not exist. Some of the goods we want exist in surplus. Some exist in shortage. And, consequently, the market has failed. But this failure is vital to the workings of the market, broadly called the ‘market process.'” (06/09/26)
https://www.econlib.org/econlog/market-failure-and-the-market-process