Positive Externality

Situations that result in a BENEFIT for someone other than the original decision maker. The benefits "spillover" to other people or society.

If the market produces at QEM why is it a market failure?

At QFM the MSC is less than the MSB. Too little is being produced so there is deadweight loss.

What should the government do to fix a positive externality?

Subsidize the amount of the externality (per unit subsidy).
The MPB then equals the MSB, no deadweight loss.