Externalities
An externality is a third-person side effect. There are EXTERNAL benefits or costs to someone other than The original decision maker.
Why are Externalities Market Failures?
The free market fails to include external costs or external benefits. With no government involvement there would be too much of some goods and too little of others.
Important
** Even Positive Externality is considered a type of market failure** — but it’s a less intuitive one than a negative externality (like pollution).