Examples of market failure?

Question

I'm writing a paper on market failure where I need to find one example and write on why the failure occurred and how to remedy the situation. Can anyone give me some good examples of market failure that I could write a whole paper on? I can think of tons of examples, but none that I've really found interesting enough to research. I'm not looking for someone to do my homework, just looking for suggestions or ideas for topics. The old examples of the lighthouse or the beekeepers are too simple - I need something I can actually expound upon. Thanks!

Additional Details

Thank you to both of you who took the time to answer my question in great detail. I did chose to do my report on climate change, because I started writing it before I received the second answer. Both of you had very helpful suggestions, so thanks again!

Answer 1

Best Answer - Chosen by Asker

Try the climate change issue. Download the Stern (former chief economist of the World Bank) report :
http://www.hm-treasury.gov.uk/independen…
It is about environmental externalities and market failures. The main concept is that climate change is a result of the externality associated with greenhouse-gas emissions – it entails costs that are not paid for by those who create the emissions"

This is quote from the report:
“Climate change presents a unique challenge for economics: it is the greatest and widest-ranging market failure ever seen”

You can write a full paper on it.

If you don't have the time to read the full report focus on chapter 2.2 "Understanding the market failures that lead to climate change"
http://www.hm-treasury.gov.uk/media/5/7/…

Asker's Rating:

Asker's Comment:

Thanks so much! The Stern Review was an excellent source for my paper.

Answer 2

If you don't like the previous suggestion, how about the housing market or commercial real estate?

Both are cyclic because of the market failures due to the time it actually takes to build new buildings.

A great deal has been written about the economics of real estate too.

In fact, there is no market that hasn't seen a failure! For example, the stock market is usually touted as a best example of a perfect market, but even there, every so often, the exchanges choose to stop trading because they think the market is behaving "irrationally" (a stock is falling too fast, etc.)
http://www.sec.gov/answers/tradinghalt.h…

Or there was the famous short-term change in rules of the Chicago silver (commodities) market when two brothers managed to corner the market.
http://www.buyandhold.com/bh/en/educatio…

(a web search will turn up dozens of other articles on this)

If changing the rules does not signal a market failure, what does?

So you should have no trouble finding plenty to write about no matter which real market you choose.