The Obesity Crisis as Market Failure: An Analysis of Systematic Causes and Corrective Mechanisms

The obesity crisis as market failure An
analysis of systematic causes and
corrective mechanisms

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
1 Impact of market imperfection and market failure on entrepreneurship activity.....................3
2 Evaluation of the way market failure and imperfection affect financial product and labour...4
3 The way government economic policies can shape business strategy.....................................5
4 Evaluation of the way government policies can shape business decision................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................7

INTRODUCTION
Obesity is one of the most important, serious growing problems across worldwide and it
has doubled and tripled within 10 years. It can be stated that obesity is mainly responsible for 5%
global death thus various steps need to be taken by government and people for better health and
safety of individual. This report includes four main question answer that is the way market
imperfection and market failure can affect entrepreneurship activities, labour and financial
products. It also explained about the way government economic policies can shape business
strategy and decision.
1 Impact of market imperfection and market failure on entrepreneurship activity
Market in which sellers and buyers can affect production and prices of products or
services due to no disclosure of information and high barriers for entry and exist is known as
imperfect market. Therefore it can be stated that there are less number of buyers and seller and
demand or supply does not have impact on prices rather it is decided by price marker.
Companies compete with each other in order to gain maximum market share to earn more
profitability and sales volume (Karnani, McFerran and Mukhopadhyay, 2016). Such as Most of
the people are not informed about various ingredients that are used in manufacturing of products
and services. Attractive marketing of harmful or high calories soft drink influence children to
intake that result in poor health. Most of the individual have become addicted to soft drink or
foods that are dense in energy due to their better taste and less expensiveness.
On other hand market failure is a economic situation in which products and services are
distributed unequally or inefficiently in free market. In market failure correct and accurate
decision taken by individual proves to be wrong for whole group. Thus, it is situation in which
quantity demand of products is not equal to quantity supplied that resulted in market failure. For
example: as per case study there are three main cause of obesity that is nutrition and calories
intake, level of exercise and genetic factors (Ertürk, 2016). The case study stated that obesity
mostly occurs due to over eating of nutrition and exercises have only minor effects in weight
loss. Food and beverages are bought and sold in free market across worldwide but it have been
noticed by researcher that several trends has resulted in decline in price of energy dense food on
contrary increase in real prices of more nutrition food. Due to technological development
physical efforts put by human have been reduced thus obesity is mainly caused because of many
rational and utility maximum individual in behaviour. Thus it is market failure as firms by