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Actually I think they fully understand it. "Market failure" does not mean that a company fails to sell something. Here's the definition:

> Market failure is the economic situation defined by an inefficient distribution of goods and services in the free market...In traditional microeconomics, this is shown as a steady state disequilibrium in which the quantity supplied does not equal the quantity demanded.

https://www.investopedia.com/terms/m/marketfailure.asp

GP claimed there are demands not being met, because suppliers make more money selling to a "virtual customer that's an average of all customers across all characteristics." If that's correct, arguably it is a market failure, and that's consistent with those suppliers making lots of money selling to that average customer.




So by that standard, any market situation in which a vendor makes high profit margins on a product in high demand would be a market failure. I really don’t think that’s what it means. The limited supply and subsequent high prices of Bugattis isn’t a market failure.

It seems to me it’s more like cases where poor infrastructure prevents distribution, or excessive regulation obstructs trade, preventing vendors and purchasers from linking up. That’s a problem on both sides. It’s an actual failure of the market itself.




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