Market Failures and the Justification for Public Intervention: Case Study for a Practical Class

This paper presents five real-world cases to analyze how market failures justify public sector intervention. Firstly, it introduces a theoretical framework addressing the main types of market failures and why their occurrence can lead to inefficient outcomes. Subsequently, five illustrative cases are examined from different perspectives: (1) the water crisis in Flint, Michigan; (2) the Cochabamba "Water War" in Bolivia; (3) Volkswagen’s "Dieselgate" scandal; (4) the opioid crisis in the United States; and (5) dysfunctions in the COVID-19 vaccine market. For each case, the paper identifies the specific type of market failure involved, its economic and social consequences, the effectiveness of governmental responses, and alternative regulatory or policy measures to rectify or prevent similar situations. Finally, an "Instructor's Guide" provides pedagogical guidance for Public Economics educators interested in using these cases in the classroom.