What is the missing market?
In microeconomics, the missing market is an example of failure on the economic market. The missing market means that there is a demand for a good or service, but there is no offer of this sought -after product. This may include a temporary deficiency or may refer to a product that is not available at any time. The missing market can be created by something as simple as a heavy storm or drought, or it can be attributed to much more complicated economic factors.
The microeconomic balance occurs when the demand for the goods is equal to the supply. The missing market is therefore a sign that the market is out of balance. Most of the time, the market that is out of balance is repaired until the demand reopes the supply. For example, if people began to demand yellow balloons, entrepreneurs would notice the potential of profit on the Ballon market and launched new balloon factories. In the case of missing market, however, suppliers are not able to produce specific Goods or Service for any number of reasons.
In many cases, this phenomenon is caused by simple changes in demand or timing effects. If suppliers are strongly focused on the formation of yellow balloon and customers suddenly develop the desire for red balloons, the company can take time to find the right red dye and move production to this new product. This temporary delay on the market is the missing market. The same type of deficiency could also occur in the coffee market if a serious drought should occur. Demand would be higher than supply and customers could not temporarily get coffee until the dryness is resolved.
In other cases, the missing markets can be attributed to much more complicated factors. One example is an electric car. Customers can wish to buy these cars, but we hesitate because of lack of information their long -term performance and availability of charging stations. Suppliers, on the other hand, hesitate to produceThese cars, because customers are still not sure of the future of these vehicles. This lack of coordination and communication created the missing market in the automotive industry.
Sometimes missing markets are simply caused by political or legal systems. For example, some consumers want to buy illegal products such as child pornography. Given the strict legal standards and personal morality, most suppliers refuse to produce this good, leading to the missing market. The missing market can also be caused by a lack of technology to produce good or lack of information. For example, people affected by air and water pollution may require remedy for this pollution. In this example, there is a missing market due to difficulty in identifying who is responsible for pollution.