Market failure is a traditional argument used for the necessity of public policies and
government interventions in the areas of health, education, public safety and national
defense. Food security should also be included in this list. Market failure happens when
free markets are “socially inefficient” (when the social benefits of market outcomes are
less than the cost paid by society as a whole for that outcome, or when the full benefits
for the use of social resources are not realized). In the case of market failure, the
“market clearing forces do not maximize social net benefits”