Market Failure and Financial Services – A Case Study of Bounded Rationality in the Market for Superannuation Products
Macquarie Journal of Business Law, Vol. 4, p. 49, 2007
28 Pages Posted: 9 Feb 2011
Date Written: June 1, 2007
Like most Western governments, the Australian Government has adopted a free market approach to the financial services industry, relying on the market to resolve which financial products and services are produced and consumed, and at what price. However, a consumer protection regime exists in recognition of potential market failures around information asymmetry and market power. This article argues that market failures appear to persist despite this disclosure-centric regime and demonstrates this using recent fees research. It goes on to discuss the reasons for this market failure and some possible solutions.
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