Information asymmetries between producers or consumers along with the problems of externalities can:

Question

Quizplus · Accepted Answer

Information asymmetries and externalities can lead to incomplete or incorrect information for market participants, resulting in inefficient resource allocation and market failure. This is because the market fails to account for the full costs and benefits of production and consumption, leading to underproduction or overproduction. Alternative dispute resolution mechanisms are not always effective in addressing these issues. Property rights may need to be used to internalize externalities and improve market outcomes.

Information Asymmetries Between Producers or Consumers Along with the Problems