In the novel how the markets fail by John Cassidy 1 Why are

In the novel how the markets fail by John Cassidy, 1. Why are spillovers (negative ones) an example of market failure?

Solution

negative spillovers or negative externalities occurs when due to the production of a certain good the social surplus is decreased, this happens because the producer doesnt take into account the social cost of his production and only take care regarding his private costs , this lead to the overproduction of the good with negative spillover thus lead to market faliure.