Assume the following: a national poll of voting-age smartphone owners shows that

Question

Assume the following: a national poll of voting-age smartphone owners shows that a strong majority would willingly pay $5.00 for an encrypted app allowing them to cast their votes on Election Day 2018 online. Voting by app would be far more convenient than voting-by-mail or casting ballots in person. Marginal revenue of $5.00 collected from that many smartphone users would more than cover the app’s development and operation costs this year. However, the app is unavailable, because county registrars of votes refuse to allow it (stating security concerns). Yes or no: is this situation the kind of market failure Stokey and Zeckhauser would identify as “The Nonexistence of Markets for Some Goods”? Why or why not?

Explanation / Answer

Market Failure is a situation when the market fails to follow the market mechanism i.e. inefficient allocation of resources by a free market. This can happen due to a lot of reasons like externalities , property rights and so on.

In this situation a strong majority is willing to pay $5 for an encrypted app to cast their votes on Election Day 2018 but the county registrars of votes refused to allow it due to security concerns. This eventually holds true because there is no market for such goods. Therefore, there is no possibilty of demand and supply since the app is made available.

Yes, this is a situation of market failure and would identify as "The Non-Existence of Markets for Some Goods."

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