What is one common outcome of market failure?

One common outcome of market failure is the insufficient provision of public goods. Public goods are characterized by non-excludability and non-rivalrous consumption, meaning that individuals cannot be effectively excluded from using them, and one person's use does not diminish the availability to others. In perfect market conditions, goods that meet these criteria are often under-produced because private companies may not find it profitable to invest in them, as they cannot easily charge consumers for their use. Consequently, this leads to a situation where the market fails to provide enough public goods, such as national defense, public parks, or street lighting, ultimately affecting overall societal welfare.

This failure contrasts with outcomes like efficient resource allocation, which typically happens in a well-functioning market, or overproduction of public goods, which is less common as the tendency in market failures usually leans toward underproduction. Perfect competition would also suggest efficient provision of goods, which typically does not occur in the presence of market failures. Hence, the insufficient provision of public goods clearly reflects a significant issue stemming from market failure.