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Economics glossary · When markets fail

Information gaps

What information gaps means in economics, as one of types of government failure, with an example and a question to test yourself.

Definition
Information gaps
An information gap is when the government lacks what it needs to know, such as the true external cost, and sets a policy at the wrong level.
Example

Can you think of an example of information gaps?

Test yourself

Can you name the four types of government failure the specifications list, and a fifth this page adds?

Learn it properly: the module

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