Describe how market failure occurs in the construction inductry and what steps can the government take in rectifying.
We know that market failure occurs when markets results in an inefficient allocation of resources. The market failure will leads to under production or over production of goods. In the construction industry, the market failures occur when rise in demand for housing may leads to shortage of skilled work force. It also leads to time taken to train a worker or skills needed by the construction industry means the supply curve is inelastic. The firms may be reluctant to train workers up because of time and cost involved in the training. Here the government may support to fill the skill gap and cost of training. The government support will increase the skill of the workers and the house price inflation.
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