Analyse, with examples, the main causes of market failure in Singapore in recent years and the effectiveness of government responses.


Explain Market Failure

  • Inefficient allocation of resources where the socially desirable outcome is not achieved

Explain causes of market failure

  • Public good, merit/demerit good, externalities, imperfect information, monopoly power, immobility of factors and inequality of income.

Nature of Singapore economy

  • Small, open, high reliance on trade, highly globalised


Identify 3 causes of market failure faced in Singapore recently, related to globalisation such as:

  • Inequality of income, immobility of labour, monopoly power & externalities

Explain each cause in detail:

  • How market failure is caused with relevant graphs.
  • The government policies that have been implemented.
  • Evaluation of the policies and suggestions


  • Show recognition of the many sources of market failure in Singapore. 
  • Comment on the relative effectiveness of the policies mentioned.
  • Suggest other policies.

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