Thus, the market will ultimately adjust to what goods and services are really worth, and market imperfections or rigidities will be ironed out through the process of market competition itself.
But competition-driven market theory will only be effective in education if the market imperfections caused by poor and weak information are corrected.
Models are solved for equilibrium states, and assume that the economy eventually returns to an equilibrium after a disturbance, while the market imperfections which generate unemployment are hard to model.
Transaction cost theory typically attributes market imperfections to bounded rationality and lock in, whilst internalization theory emphasises asymmetric information and weaknesses in property rights.
Another reason for capital market imperfections associated with limited commitment is the ability of the borrower to renegotiate the terms of the contract ex post.