Please note, a market response to school failure only applies to schools that have to compete for students and their families, like private schools and those in systems, such as Singapore's secondary schools system, where every school must compete for students. By contrast, in America, schools often don't have to compete for students; students are simply sent there, no matter how good or bad they are, because of the student's address. This haphazard district zoning is probably the greatest source of inequality both in American education and in American life.
If private schools are bad, they lose their students, the word gets out, and the school shuts down. End of story.
I have taught in three schools in America. Most recently, I joined a failing chartered school in Silicon Valley, which had lost nearly eighty percent of its students in the six months before I arrived. It closed after one year. This was the reasonable decision of that local market. I also taught at the Crossroads School in Santa Monica, an excellent private school that has grown and thrived for forty years. The market is working there too.
I also taught at a traditional public school, Locke High, which had been floundering for decades before I arrived. But there was no market in that neighborhood, no alternative for most of its students, other than to join a gang, which too many of them did.