it's 16 hours until my exam and having done economics for 9 months this is the first time I've properly understood any of it. you are brilliant

This video is a merit good.

I think you just saved my Ecnomics grade. thank you so much! :) it's so clear and easy to understand.

Re-wrote. Barry, I agree with a bit of your assessment on market failure (not all). It's important to defend Mr. Holden, because he is one of the greatest online econ teachers today. This is a long high school curriculum that he has to follow. Also, "Market Failure," is a hotly debated topic in economics that no one agrees on. There are a lot of Americanized "Austrian School" people on here jumping down Phil's throat. The Misses Institute is more of an American made philosophy/ cannon.

Mr Holden you are a very good teacher your videos filled in the gaps and will give me the edge that will get me the A in my A-levels you have no idea how thankful I am to you

Mr. Holden, just watched your video. My exams are fast approaching and i find them of great help to me in my preparation. My teachers here in Wales, use your videos quite often in class, when wishing to describe certain areas & simply to get us to subscribe& use your great channel as an aid to our exam preparations. I have great teachers, but I tell you, what a wonder it would be if there were Paj Holden videos for all my subjects. I'd just like to say, a big thankyou. keep up the great work.

Paj, you are the gem of our economics class. We worship you every lesson. Thanks for all your epic economics lessons, supreme writing speed and electrifyingly quick rubbing out. Got my exam on friday!

These videos are GREAT! Im taking an online microeconomics course and these lectures fill the missing gap. I did so much better on my exam because I reviewed with these videos rather than just the eBook.

And.... he presses STOP. Love it. Great explanation for why markets can fail.The better people can come to understand the limitations of market forces and possible corrective actions by government, the better off we are going to be in creating happier societies.Of course, your caveat at the end is right on target. Government can't always fix everything. But neither is it the case that all government action is bad and the market is always right.

My economics teacher actually plays us your videos in class - that's how good you are! Thank you!

am taking my A Levels in a week's time; your videos have been really invaluable in my revision. Thank you so much!

When you use the scientific method to study the distribution of scarce resources in society... that is economic science. Barry you are making a point on market failure. Thats only one small point among many regarding markets. It's also an area no one agrees on. It's valid to teach that.

Brilliant (as usual), thank you! and please don't take any note of the moronic argument below, just know that there are SO MANY students around the world that love your videos and use them daily as a concrete source of revision. So on behalf of all of these students - thanks! :)

Without you i'd have little to no economic knowledge, god bless you sir.

This was an incredible useful video - to the point and concise but explained with examples. Thank you very much

Dear Phil, I'm an IB student from India and I'd like to thank you for all these videos, This is the best economics revision I've had...!

This was Amazing, Thank You, didn't have time to go over this in class & so this was brilliant to learn this in half an hour.

This video is better than the 30 pages on market failure and my teacher put together

1) Insurance, and arbitration internalize externalizes. Not a market failure. 2) Attraction, advertisements, subscription. Not a market failure. For example the lighthouse, if their is no lighthouse, that increases risk and therefore price of traded goods. So the dock that would want higher volume, would be willing to build the lighthouse. They could ask for shares from the venders in exchange for advertisement and consecions. Also insurance companies and subscribers would build them. If they are loosing ships and making high payouts, they would build them so the company could pay out less often or the subscriber to have lower premiums. Or technological advancement would make them obsolete. 3) Trade and consumer publications and reviews, 2nd opinions. Not a market failure. 4) Monopolies and collusion still have to compete in the absence of government to prevent entry by producing a superior product at lowest price. Barriers to entry are a symptom of government, not the market. 5) Futures, options, and insurance. those only fail when "regulated". Not a market failure. 6) Unemployment is caused by barriers to entry, and labor regulations. Again, a failure of government, not the market. Geographic immobility, that means they limit themselves to the local market, that is a personal problem not a problem of the market itself. Skills are transferable, without wages being minimum an employer can risk training them on the job and allowing the employment to write contracts to gaurentee return on their investment. To build skill there are also trade schools (also limited by government). Discrimination, again look at governments involvement, it is almost entirely the cause. If government makes it too expensive to fire (due to anti-discrimination laws) they will not hire. If business A does not discriminate but B does, A will out-compete B, leading to B either serving a niche market, being forced out of business, or forced to adapt. Government is theft and violence, it cannot solve anything the market cannot. Problems in markets are opportunities.

This is so helpful! Thank you for taking the time to make these videos - they are very much appreciated!

I have just started learning economics and you make it so easy to understand , thank you!!

If wish you were my teacher :| Teacher in my school just read things from the book :| You made me love the subject. Thank you so much :)

Thank you so much for doing all of these videos! They are clear and easy to understand with explanations in all the right places and where I need them. I'm revising for my Unit 1 exam in January and I am so grateful to you. Keep up the good work please :)

Thank you sir, this video was really helpful in one of the projects I am working on. Thanks again!

Thanks a lot. You are a true teacher. a guru. Accept my gratitude sir.

His eyebrow game is strong

Honestly I could do a days economics in 10 minutes thanks to you making it more enjoyable.

Thank you so much! you have a way of simplifying economics! really appreciated!

IB Economics exam is in less than 3 hours and here I am, watching your videos Mr Holden! Thank you for putting the effort and time in these videos. We call you some kind of economics God in our school haha :) If you do have the time in the future to add Balance of Payments in your channel, would be awesome ! Thank you once again !

Your are brilliant... Good luck with the Econ 1 exam tomorrow people!

This video really helped me! I couldn't find any explanation even-though my AS exams are tomorrow, this video helped me clear most of my doubts.

I did enjoyed your approach, really interesting for someone who´s doing the IB DP even tho you explained it as an A-levels subject.

Revising for A2 Unit 3, this is really good stuff! A lot clearer than Ray Powell in the Textbook that's for sure.

Ah, I loved the dentist example, as that is actually something that happened in Norway not long ago. To check if this claim was true, a group of people decide to go to several dentists (within two days, so not much happen to your teeths in two days) and ask if there were any problems. The result were scary. Some found one hole, others found two, some found none (maybe they had a fine business already) and so on.

Very supplemental in nature in teaching Junior High Students//

There are connections I'm seeing. There's no incentive to provide public goods in the free market because those create positive externalities and lead to the free rider problem. You can't charge people for spending time under your streetlamp so those aren't provided. Averting the free rider problem allows externalities to act in the favour of the public and not of firms. Also asymmetric information causes more negative externalities as the people wouldn't know the consequences of smoking and drinking and betting excessively if the government wasn't there to regulate betting and put those health warnings about lung cancer on cigarette boxes. This video is great, thanks a lot.

I love walking into antique shops and seeing a very valuable chair made by a famous carpenter 300 years ago

Interesting lecture. I lean towards libertarianism, so my faith in government solutions is limited. Of course a lot of the problems with labor (I'd say most) are caused by government interference. But his lecture is informative, so I think I'll subscribe.

thankyou so much sir. i've got so much respect for you right now :) and i'm all the way from this tiny island called sri lanka. much appreciated :)

This would be good source material for the Occupy protests. It explains the root of what I/they want but can't articulate: Some kind of government action to remedy as much of these failures as practical. As a student of Econ, believer in managed markets and KZfaq discussioner, I will reference this video in my disputes with Libertarian fundamentalists and otherwise unreasonable anti-Keynesians.

Thank you sir you saved my day ...you explained very well and I understand easily 🙏

I would do almost anything to have you as my teacher, you are amazing, keep it up!

distribution of income is a major market failure. I'm interested why you didn't mention it? Also - Labour failure (unemployment) can be caused by Government intervention with the introduction of a minimum wage (price floor), which creates a surplus of people willing to work. Great video! Economics exam in a week...

Pls continue to make videos in 2013! I simply find that your videos are able to help me understand the concept better:)!

I could take Economics a level in my own time and not go to my lessons and rely just on your videos and i would get a higher grade than if going to 6 lessons a week with my other teachers!

Great analysis, but when it comes to missing markets I find that the examples can actually have markets. For instance street lights or lighthouses could be created by insurance companies to avoid having to pay for damages done to cars and ships when they go off the road or crash into cliffs because of poor lighting. As such I find that often you could find markets for the strangest things (Although for exams and such it might be just as well to write the 'official' theory and skip the rest).

thanks so much sir for your videos. there such an assistant in my my macro economics. keep it that way.thanks

good to watch something from you Mr Holden :) It's been a long time and the topic of the video is fresh, especially before the second wave of the financial crysis.

Nice video! I must say I don't agree on unstable prices being a market failure. It can be a problem as you say, sometimes solved with futures, but a problem does not automatically constitute a market failure. As for labor market failure, Keynes blamed sticky prices, which brings to mind that you might want to generalize "labor market failure" to "sticky prices failure" or perhaps "sticky behavior failure", which would occur when market actors respond to market incentives to slowly. Thanks!

I appreciate this video series. Very useful and well explained.

0:25 My own personal criticism of the the theory of "market failure" is that I think it conflates the terms "efficient" (which can be an objective term), with "sufficient," which is a _sub_ jective term.

My favourite bit is 16:31

I generally agree with this video and it is saddening that most teachers don't really focus on externalities when they teach, although, I disagree with the labour market failure arguments. A lot of them are consequences of governmental regulations(e.g. youth unemployment is a function of the minimum wage). I think labour markets fail due to wage stickiness, but I'm not a labour economist and I didn't find an adequate theory on stickiness of wages that has no major flaws.

2. The free market is almost never perfect and the invisible hand almost never exists in the presence of search costs, transaction costs, exit costs (for workers and firms), turnover costs, imperfect information, signaling, adverse selection and credit rationing etc. Please read the Nobel lecture of Joseph Stiglitz as an easy-to-understand introduction for someone who apparently haven't even read an introductory textbok in Microeconomics.

very well explained! 1k Likes

You sir, have made my economics exam today seem a lot easier.

You have to admit that Sowell is more accomplished than most economists, and you will have a long way to go to become as accomplished as him.

In this example: MR is the first derivative of the Demand Curve, which means it always slopes more steeper than the demand curve. Anyways…that sets up a situation where the Equilibrium Price is higher than otherwise would be in perfect competition, and the Equilibrium Quantity is lower. This results in a dead weight loss, where the quantity supplied is lower than it should be.

Hey pajholden, just a suggestion, you can make a systematic lecture series which explains all basic micro economic and macro economic concepts! That would really help people trying to learn economics at home, and everyone in general!

he has subliminally mentioned merit and demerit goods; demerit goods lead to negative externalites whilst merit goods lead to positive externalities

Great video, thank you so much... 2018 subscriber ..well explained

Great videos to help me with my microeconomics

Nicely put. I was interested the entire clip

You are the Khan Academy of macroeconomics! Google; give this man a million dollars, or even better; pound sterling!

I cant stop staring at those eyebrows...

this is brilliant, your a hero

Just wanted to say thank you very much for these helpful videos :)

I am a fan of how u simplify everything! xD

Useful material for me. Thank you Pajholden.

Thank you so much for the videos. Could you do a video on Exchange rates, like summaries of the different types. It would add so much to the already vast knowledge that is your videos this far.

4. Lack of competition This could be called a market failure but if the price becomes to high what will prevent new companies from entering the market thus causing lower prices? Usually it's the government who creates barriers to market due to regulation.

Oh, and your videos are GREAT. maybe you can collaborate with thenewboston and make an economics tutorial series!

IM YOUR #1 FAN THANKYOU SO MUCH THIS HELPED ME WITH MY STUDIES ALOT!

Very informative. Thank you very very much

@anyfekinnamewilldo I think the focus is on classical market failure, and provides the case for government intervention. Consequences of policy would come later in macroeconomics.

Great teacher, very clear 👌.

Thank you very much. You are a wonderful teacher :)

thank you sir, this is truly a great explanation .

exam today and u've saved me :D thank you!

Mr. Holden was my high school teacher :) He is the best (apart from being academically amazing, he is very funny).

Thomas Sowell is a decorated economist who received his training at the University of Chicago. The Chicago economics program is arguably the most prestigious in the world, rivaled only by MIT and the LSE. His awards are too numerous to mention here. He is also taken more seriously in the academic world, than most economists, even Nobel columnists like Paul Krugman. While it's not proper to debate Phil on his own class' video channel, endstation2 (whoever you are) needs to be corrected on that.

4. Just an additional comment on NATURAL monopolies (are your serious when you write that you haven't heard of this?). Because unregulated natural monopolies earn economic profits greater than zero in the long run, but cannot attract new entrants into the industry, government agencies often regulate the price they can charge,

@000TheGingerOne000 I think so, except for negative externalities because he uses the cost and benefit diagram while in ocr we just use the demand and supply diagram.

@Aaron Horvitz 2. Just one of the many basic examples from Wikipedia: "A natural monopoly is a condition on the cost-technology of an industry whereby it is most efficient (involving the lowest long-run average cost) for production to be concentrated in a single firm."

Great for my Exam Revision... Thanks a lot!

Brilliant videos

amazing teacher :) wish you taught me...

The dentist tells his patient that the need work done which in reality they do not. If this malpractice gets discovered by a single client then the dentists' career is at stake. This is a very weak argument like many he makes.

Good luck for Monday guys

Thank you, Sir ! You are EXCEPTIONAL. I wish you could come and replace my Eco lecturer at Auckland University .....

@heckler73 Not sure what you mean by "between a Pet Rock and a Toaster Oven" but it doesn't sound terribly complimentary! Tom Woods is an historian by trade with IMO an excellent understanding of economics..particularly from the Austrian school. There are literally dozens of free market orientated economists who have been debunking this market failure stuff for DECADES which to be frank has as much right to appear in curriculum text books as astrology.

Unfair, I used many posts to say what you just said in four words! :)

It will be great if you prepare lecture about asymmetric information

PERFECT! We are doing this in class atm!

Great videos paj, if you have time can u make a video about road pricing, franchishing and CBA( and COBA) please. Would be great if you could got my exam coming up soon and couldnt find anything on it on your channel about them. Thank you.

plz plz plz a vid on economic efficiency :d ur vids are 11/10

Learn alot thnkz

Thank you sir! This was very informative

really helpful cheers paj

These responses to your posts don’t display in order ( please see the model below) Anyways, when you use a Cornot Equilibrium, then the new competitors enter the market based on the actions of the monopolist. The higher price and lower quantity supplied by the monopoly allows competitors to move in to supply that missing quantity, and undercut the monopolist’s price. As more competitors move in, you tend to move toward more monopolistic (perfect) competition.