Missing markets
Topic: Market Structures, Market Failure and Competition · NCERT: Beyond NCERT
Meaning
A missing market is a case where no market exists for a good or a risk. Because nobody buys or sells it, it has no price, so nothing signals its value. This usually happens because of externalities (spillover effects on others) or information problems. Clean air, quiet streets and some kinds of insurance are common examples. Missing markets are the shared root of three kinds of market failure: externalities, public goods and commons, and information failures.
Example
No one pays for the clean air that stubble burning in Punjab and Haryana destroys. So farmers ignore that cost when they burn crop waste. One fix is to create the missing market. The Surat particulate-matter Emissions Trading Scheme (Gujarat Pollution Control Board, September 2019) made emissions tradable among textile and dyeing units.
Don't confuse with
- Public goods: these are one specific type of good (non-rival and non-excludable). A missing market is the broader situation where no trading happens at all, whatever the cause.