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Market Failure - What Is the Exercise of Building a Market?
Markets fail to achieve their social potential because of ediosyncratic transaction friction. One reason that people don't necessarily get the used car market is because it's very local, and a buyer might not see the set of supply they actually want. The person who will represent a lemon as if it were really high quality when in fact drive it off the lot has got to collapse. And so that's a structural feature that drives market failure.