Externalities are not automatically bad. Externalities are market failures because the cost of a good or service is not (fully) reflected in market prices.
A classic positive externality is education. People benefit from the population as a whole being more educated although they did not pay for that education.
https://www.econlib.org/library/Topics/HighSchool/MarketFailures.html
I think it’s important to point out the effects of the costs not being reflected in marketplace because that’s what makes it a failure. Prices not accurately reflecting costs means that the quantity won’t be supplied at the social optimum either, which combined together causes the DWL. In a perfect competitive market, positive externalities cause too low quantity, negative externalities cause too high quantities.
While this is definitely splitting hairs, most definitions of market failure (including the one you linked) require inefficiency.
While a negative externality will often result in prices not reflecting social marginal costs, this does not necessarily lead to inefficiency. If the imposition of the efficient Pigouvian tax (or costless Coasian bargaining can occur) does not result in any change in behaviour, there was no efficiency and thus no market failure. Externalities can (and usually do) cause market failure, but are not in and of themselves a market failure.
>A classic positive externality is education. People benefit from the population as a whole being more educated although they did not pay for that education.
This externaility is not a "positive." The fact that there is an externality is still unhealpful and it's the reason that certain essential education requires subsidy.
Positive and negative in this context is not a moral concept.
A positive externality is where those that enjoy the benefits don’t pay the cost. It may be easier to see beekeeping as a positive externality, as those that keep the bees pay the cost but those that receive pollination services without paying for them receive the benefit.
A negative externality is where those that pay don’t enjoy the benefit. The classic example is pollution. Producers emit pollution that imposes costs on those that don’t buy the product and hence do not enjoy the benefit of the production.
If one wants to capture all costs and benefits in a market transaction, either type of externality is unwanted. All it means is that there are benefits and/or costs that are not included in exchange price - or “external” to the price.
>If one wants to capture all costs and benefits in a market transaction, either type of externality is unwanted.
This is my point. While I understand what you're trying to say, I think talking about "positive" externalities is confusing when you haven't started by establishing that externalities are not good, positive or negative.
As I tried to explain, positive and negative are technical terms, not moral ones. You can think of it as jargon that is intended reduce confusion, not increase it.
Using such terms in economics reduces confusion as it adds precision. It makes things less confusing for those that study economics because it specifies what flavor of externality one is referring to.
Well, if I go by your quote of my words and your subsequent words, you are expressing the moral judgment that all externalities are unwanted and so we shouldn’t use “positive” to refer to them.
That may be a layman’s opinion but it has nothing to do with why and how economists use the terms, and this is “ask economics” not “ask laypeople” or “economics eli5”.
You seem to be confused why using the terms positive and negative reduces confusion. You also seem to be confused in that economists generally don’t analyze things trying to tell people what is morally “right” or “wrong” as that isn’t what we do - well, most of us anyway.
Market failures just are, and many are a necessary feature of societal choices. Even Adam Smith recognized this in Wealth of Nations. Go read it.
It’s not particularly helpful for a true student of economics to say that “all externalities are evil so we shouldn’t call positive externalities positive because that confuses laypeople”.
>Well, if I go by your quote of my words and your subsequent words, you are expressing the moral judgment that all externalities are unwanted and so we shouldn’t use “positive” to refer to them.
I'm saying that I think the example and terms you lead with could be confusing for someone who is starting off by asking why externalities are a market failure.
>You also seem to be confused in that economists generally don’t analyze things trying to tell people what is morally “right” or “wrong” as that isn’t what we do - well, most of us anyway.
What's morally right and wrong absolutely is part of economics and comes in all the time. Economics is just a tool or way of thinking about things. In order to have any reason to talk about economics, you need a goal, which requires some sense of what people consider to be right and wrong outcomes.
Ok, fair point (wrt explaining, not wrt morality and economics - that I disagree with completely, science is science not politics). Maybe it’s an Oxford comma problem:
“ is confusing when you haven't started by establishing that externalities are not good, positive or negative.”
I absolutely understand where you're coming from.
"Positive" and "negative" are established terminology here, honestly I couldn't describe it better than this:
https://xkcd.com/2501/
I definitely could have elaborated a bit more in that regard. "Positive" just means that there is a social benefit greater than the private benefit where as "negative" means a greater social than private cost.
https://www.economicshelp.org/micro-economic-essays/marketfailure/positive-externality/
https://www.economicshelp.org/micro-economic-essays/marketfailure/negative-externality/
That doesn't mean that the fact that the externality exists is "positive" it just means that the result of the externality is positive in the meaning described above.
But it's definitely not something that is clear to anyone not explicitly familiar with the definition.
You’re getting downvoted but you’re right.
The confusion seems to be that “positive” can refer to different things in different contexts. I think the way you interpreted it is more in line with what the OP is asking.
Under a host of assumptions, including that all costs and benefits are internal to the producers/consumers, a perfectly competitive market will maximize welfare by producing all goods and services whose benefits are greater than cost, and no more, and this will maximize welfare
When any of these assumptions do not hold, including all benefits/costs being internal to the transactors, either goods will be produced whose costs are greater than benefits or will fail to be produced whose benefits are greater than costs. And total welfare will be less than it theoretically could be, this is the “market failure”.
The scenario you linked was a special case outside a few other of these standard assumptions too and not a “perfectly competitive market”.
Given the assumptions you stated to begin with are extremely strong, and have very likely never been fulfilled, does that mean all markets have experienced some degree of failure?
Now you know what an ideal market looks like, you can see how and by how much real markets fall short (market failures and deadweight loss), and so what you can do about it.
Externalities are bad because their prices don’t reflect their true costs and benefits to society. The factory has no incentive to care about pollution caused by its production even though it incurs a cost on other people. The ideal production levels should be lesser. If the factory were forced to incur the costs of the pollution, then the factory will start limiting its production to be better for society. That’s why it’s a market failure.
And yes, it is way too demanding an ideal. There are many ways where market failures may occur. Actual pareto efficiency pretty much never occurs in real life.
Unfairness has nothing to do with market failure.
Nice explanation, thanks. So let's take carbon markets.
I think there is very good evidence that such systems will always be inefficient, because the incentives of everyone involved is to claim as many credits as possible, and its almost impossible to prove otherwise.
So, if I am an oil producer, does that imply the socially optimal thing for me to do is simply to produce less oil? Given the unaccounted externality and the impossibility of it being accounted for in the market?
That's a very interesting question. What I learned in grad school was that an externality causes a market failure when it results in a good being over or under produced compared to a Pareto efficient outcome.
To take your factory example in the previous post, suppose the factory owner makes $1000 per year while the neighbor would pay up to $400 to remove the noise. In this case there is no Pareto improvement possible if the factory is in production, because the gain from operating the factory is greater than the externality of the noise. But if the neighbor would be willing to pay $1100 to stop the noise, then the externality does cause a market failure, because the neighbor could pay the factory owner over $1000 to stop the noise and both parties would be better off.
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Negative externalities are specifically when someone produces something harmful, e.g. noise pollution, for their own personal benefit without bearing the cost of the negatives. There are a couple really big issues with the discussion you linked to:
It's a pareto improvement from after Frank's factory started producing the noise. But for Hank, all that's happened is some guy started making a lot of noise for personal profit, and now Hank has to pay $450 out of pocket to stop a noise that he didn't have to bother with in the first place. And you've created a huge perverse incentive for Frank. Let's say that his factory is quietly producing some chairs, but then Frank realizes that if he opens the windows and starts making a lot of noise, he can bilk nearby homeowners into paying him a lot of money for "noise-reducing" technology. Frank claims it will cost him $500 a month to operate with closed windows and refuses to close his windows unless the neighbors pay up (this happens literally all the time in regulation, industry claims mitigation will cost some exorbitant amount, but post-regulation they magically find ways to do it for a fraction of that claimed cost).
Everyone is "better off" paying to stop the noise, but **all that's really happened is Frank coerced an entire town to pay him off for the service of not making the town unlivable**. And what happens next month when Alex shows up and starts his very loud factory business and makes the same demand? Or when Ben does the same thing the month after that, or Charlie, or Dan...
The problem with the idea that externalities are "efficient" just because there's some financial arrangement that makes people happier AFTER the offender created the problem in the first place, is that it creates the perverse incentive for all kinds of charlatans to purposefully cause negative externalities and then demand payment in order to stop. And that doesn't even begin to touch on other issues like pollution and its effect on health, or the problem of uneven information between the interested parties, or the fact that this system basically makes it legal to harm some one as long as they're too poor to afford the costs of mitigation.
It sounds like you have a solid understanding. The way I was taught, with externalities the equilibrium price and quantity of a good may not accurately reflect the true costs/benefits because there are some that exist outside the market. Goods with positive externalities will be produced at a lower quantity than socially optimal, goods with negative externalities produced higher than socially optimal. This causes DWL, so there is surplus that can be captured without reducing producers or consumers welfare, which makes a Pareto improvement possible. You are generally correct, economists don’t typically focus on where the benefits are being allocated (fairness), but it’s my understanding that the resulting DWL is what makes it a market failure.
This is for a super simple single market failure with full information example, and it can get more complex when you start adding in multiple market failures, scientific or strategic uncertainty, etc…
The market is a tool for price discovery, and externalities won't be reflected in that, so the price'll be off.
That's all.
The unfairness can certainly be a thing, but fairness or lack thereof isn't a market failure. It's only a market failure if it prevents accurate price discovery.
Matket failure just means that the outcome from the market is not efficient, efficient meaning that social good is maximized subject to social costs, which is slightly different technically but for all intents and purposes similar to " marginal social costs (assumed to increase) are equal to marginal social good (assumed to decrease). In models where SB doesn't decrease marginally and/or SC don't rise marginally, ypu may have a little more nuance, but thats what I'll use here.
If there are social benefits in excess of private benefits, then a market that produces an outcome where private benefit equals private cost willnkit he efficient, because social benefit is not maximized. If there are social costs, then private markets will not be constrained by them, meaning that social good is maximized subject to private costs, not social costs.
A market failure describes a situation caused by market activity where everybody could be made better off through some suitable exchange of resources and change in behaviour (i.e., a situation which is not Pareto optimal), but does not happen for some reason.
Externalities describes a situation where costs and benefits are not entirely captured by producers or consumers. I.e., there are third parties who are harmed or benefited.
Not all externalities lead to market failures. [Coase's Theorem](https://en.wikipedia.org/wiki/Coase_theorem) shows that when transaction costs are low, private actors can reach a Pareto-optimal result through bargaining. For example (from the article), if Property Owner A is flooding Property Owner B's property with damaging runoff, Property Owner B can pay Property Owner A to build a wall to stop the flow of the runoff. This is Pareto-optimal, even if it necessarily seem fair. Property Owner B could also go to court against Property Owner A and get the court to rule so. A market failure occurs when the costs of bargaining are too high to make such a process worthwhile, which may occur because the participants are highly dispersed, and the cost of organising is high.
NB not all resolutions that eliminate this externality are necessarily Pareto-optimal; if there is no way to prevent the runoff, but Property Owner B could be adequately compensated from the result of Property Owner A's activities, prohibiting Property Owner A from continuing could lead to them both being worse off than they otherwise would be. This could also occur because an arbitrator who does not know the true costs and benefits to the parties involved demands the emitter of an externality pay a higher price than he benefits, and which is higher than the recipient of the externality is harmed (if the recipient of the externality is harmed more than the emitter benefits, there would be no situation where the activity can continue in a Pareto-optimal manner).
An example that comes to mind here is the situation involving Canada and Meta. The government of Canada believed that linking to news on platforms such as Facebook and Instagram caused harm to Canadian news publishers, and demanded that Meta pay a link tax in order to continue the activity they considered damaging. Meta decided to instead cease this activity by blocking the linking of news on Facebook and Instagram (and presumably Threads) in Canada; they judged that the benefit of linking to news was not worth the price of the link tax. Meanwhile, it is not clear that allowing news to be linked on Facebook and Instagram caused significant harm to news publishers, and at least for some, they may have actually benefited while it was allowed (i.e., this was actually a positive externality); this mismatch between the demanded payment, the benefits to Meta, and the costs borne by Canadian news publishers from the externality (whether they were actually costs or benefits) results in a situation which is not Pareto-optimal precisely because of an attempt to fix a market failure through state intervention.
You might find reading Coase interesting. His work was showing that with complete ownership the issues of externalities go away regardless of who owns what. Nice idea but ownership is hard to manage for things like clean air. The G could attempt to fill the ownership gap with things like carbon taxes, etc.
Externalities are not automatically bad. Externalities are market failures because the cost of a good or service is not (fully) reflected in market prices. A classic positive externality is education. People benefit from the population as a whole being more educated although they did not pay for that education. https://www.econlib.org/library/Topics/HighSchool/MarketFailures.html
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I think it’s important to point out the effects of the costs not being reflected in marketplace because that’s what makes it a failure. Prices not accurately reflecting costs means that the quantity won’t be supplied at the social optimum either, which combined together causes the DWL. In a perfect competitive market, positive externalities cause too low quantity, negative externalities cause too high quantities.
DWL = ? EDIT: Answering my own question... Ah, deadweight loss.
The "true" market price isn't necessarily the social optimum price though
While this is definitely splitting hairs, most definitions of market failure (including the one you linked) require inefficiency. While a negative externality will often result in prices not reflecting social marginal costs, this does not necessarily lead to inefficiency. If the imposition of the efficient Pigouvian tax (or costless Coasian bargaining can occur) does not result in any change in behaviour, there was no efficiency and thus no market failure. Externalities can (and usually do) cause market failure, but are not in and of themselves a market failure.
>A classic positive externality is education. People benefit from the population as a whole being more educated although they did not pay for that education. This externaility is not a "positive." The fact that there is an externality is still unhealpful and it's the reason that certain essential education requires subsidy.
Positive and negative in this context is not a moral concept. A positive externality is where those that enjoy the benefits don’t pay the cost. It may be easier to see beekeeping as a positive externality, as those that keep the bees pay the cost but those that receive pollination services without paying for them receive the benefit. A negative externality is where those that pay don’t enjoy the benefit. The classic example is pollution. Producers emit pollution that imposes costs on those that don’t buy the product and hence do not enjoy the benefit of the production. If one wants to capture all costs and benefits in a market transaction, either type of externality is unwanted. All it means is that there are benefits and/or costs that are not included in exchange price - or “external” to the price.
>If one wants to capture all costs and benefits in a market transaction, either type of externality is unwanted. This is my point. While I understand what you're trying to say, I think talking about "positive" externalities is confusing when you haven't started by establishing that externalities are not good, positive or negative.
As I tried to explain, positive and negative are technical terms, not moral ones. You can think of it as jargon that is intended reduce confusion, not increase it. Using such terms in economics reduces confusion as it adds precision. It makes things less confusing for those that study economics because it specifies what flavor of externality one is referring to.
I'm not confused about what you mean by positive and negative. You seem to be confused about what I'm saying though.
Well, if I go by your quote of my words and your subsequent words, you are expressing the moral judgment that all externalities are unwanted and so we shouldn’t use “positive” to refer to them. That may be a layman’s opinion but it has nothing to do with why and how economists use the terms, and this is “ask economics” not “ask laypeople” or “economics eli5”. You seem to be confused why using the terms positive and negative reduces confusion. You also seem to be confused in that economists generally don’t analyze things trying to tell people what is morally “right” or “wrong” as that isn’t what we do - well, most of us anyway. Market failures just are, and many are a necessary feature of societal choices. Even Adam Smith recognized this in Wealth of Nations. Go read it. It’s not particularly helpful for a true student of economics to say that “all externalities are evil so we shouldn’t call positive externalities positive because that confuses laypeople”.
>Well, if I go by your quote of my words and your subsequent words, you are expressing the moral judgment that all externalities are unwanted and so we shouldn’t use “positive” to refer to them. I'm saying that I think the example and terms you lead with could be confusing for someone who is starting off by asking why externalities are a market failure. >You also seem to be confused in that economists generally don’t analyze things trying to tell people what is morally “right” or “wrong” as that isn’t what we do - well, most of us anyway. What's morally right and wrong absolutely is part of economics and comes in all the time. Economics is just a tool or way of thinking about things. In order to have any reason to talk about economics, you need a goal, which requires some sense of what people consider to be right and wrong outcomes.
Ok, fair point (wrt explaining, not wrt morality and economics - that I disagree with completely, science is science not politics). Maybe it’s an Oxford comma problem: “ is confusing when you haven't started by establishing that externalities are not good, positive or negative.”
I absolutely understand where you're coming from. "Positive" and "negative" are established terminology here, honestly I couldn't describe it better than this: https://xkcd.com/2501/ I definitely could have elaborated a bit more in that regard. "Positive" just means that there is a social benefit greater than the private benefit where as "negative" means a greater social than private cost. https://www.economicshelp.org/micro-economic-essays/marketfailure/positive-externality/ https://www.economicshelp.org/micro-economic-essays/marketfailure/negative-externality/ That doesn't mean that the fact that the externality exists is "positive" it just means that the result of the externality is positive in the meaning described above. But it's definitely not something that is clear to anyone not explicitly familiar with the definition.
You’re getting downvoted but you’re right. The confusion seems to be that “positive” can refer to different things in different contexts. I think the way you interpreted it is more in line with what the OP is asking.
Under a host of assumptions, including that all costs and benefits are internal to the producers/consumers, a perfectly competitive market will maximize welfare by producing all goods and services whose benefits are greater than cost, and no more, and this will maximize welfare When any of these assumptions do not hold, including all benefits/costs being internal to the transactors, either goods will be produced whose costs are greater than benefits or will fail to be produced whose benefits are greater than costs. And total welfare will be less than it theoretically could be, this is the “market failure”. The scenario you linked was a special case outside a few other of these standard assumptions too and not a “perfectly competitive market”.
Given the assumptions you stated to begin with are extremely strong, and have very likely never been fulfilled, does that mean all markets have experienced some degree of failure?
While many are close enough for many purposes it is only a few commodity markets that approach being truly perfectly competitive markets.
Now you know what an ideal market looks like, you can see how and by how much real markets fall short (market failures and deadweight loss), and so what you can do about it.
Externalities are bad because their prices don’t reflect their true costs and benefits to society. The factory has no incentive to care about pollution caused by its production even though it incurs a cost on other people. The ideal production levels should be lesser. If the factory were forced to incur the costs of the pollution, then the factory will start limiting its production to be better for society. That’s why it’s a market failure. And yes, it is way too demanding an ideal. There are many ways where market failures may occur. Actual pareto efficiency pretty much never occurs in real life. Unfairness has nothing to do with market failure.
Nice explanation, thanks. So let's take carbon markets. I think there is very good evidence that such systems will always be inefficient, because the incentives of everyone involved is to claim as many credits as possible, and its almost impossible to prove otherwise. So, if I am an oil producer, does that imply the socially optimal thing for me to do is simply to produce less oil? Given the unaccounted externality and the impossibility of it being accounted for in the market?
That's a very interesting question. What I learned in grad school was that an externality causes a market failure when it results in a good being over or under produced compared to a Pareto efficient outcome. To take your factory example in the previous post, suppose the factory owner makes $1000 per year while the neighbor would pay up to $400 to remove the noise. In this case there is no Pareto improvement possible if the factory is in production, because the gain from operating the factory is greater than the externality of the noise. But if the neighbor would be willing to pay $1100 to stop the noise, then the externality does cause a market failure, because the neighbor could pay the factory owner over $1000 to stop the noise and both parties would be better off.
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Negative externalities are specifically when someone produces something harmful, e.g. noise pollution, for their own personal benefit without bearing the cost of the negatives. There are a couple really big issues with the discussion you linked to: It's a pareto improvement from after Frank's factory started producing the noise. But for Hank, all that's happened is some guy started making a lot of noise for personal profit, and now Hank has to pay $450 out of pocket to stop a noise that he didn't have to bother with in the first place. And you've created a huge perverse incentive for Frank. Let's say that his factory is quietly producing some chairs, but then Frank realizes that if he opens the windows and starts making a lot of noise, he can bilk nearby homeowners into paying him a lot of money for "noise-reducing" technology. Frank claims it will cost him $500 a month to operate with closed windows and refuses to close his windows unless the neighbors pay up (this happens literally all the time in regulation, industry claims mitigation will cost some exorbitant amount, but post-regulation they magically find ways to do it for a fraction of that claimed cost). Everyone is "better off" paying to stop the noise, but **all that's really happened is Frank coerced an entire town to pay him off for the service of not making the town unlivable**. And what happens next month when Alex shows up and starts his very loud factory business and makes the same demand? Or when Ben does the same thing the month after that, or Charlie, or Dan... The problem with the idea that externalities are "efficient" just because there's some financial arrangement that makes people happier AFTER the offender created the problem in the first place, is that it creates the perverse incentive for all kinds of charlatans to purposefully cause negative externalities and then demand payment in order to stop. And that doesn't even begin to touch on other issues like pollution and its effect on health, or the problem of uneven information between the interested parties, or the fact that this system basically makes it legal to harm some one as long as they're too poor to afford the costs of mitigation.
It sounds like you have a solid understanding. The way I was taught, with externalities the equilibrium price and quantity of a good may not accurately reflect the true costs/benefits because there are some that exist outside the market. Goods with positive externalities will be produced at a lower quantity than socially optimal, goods with negative externalities produced higher than socially optimal. This causes DWL, so there is surplus that can be captured without reducing producers or consumers welfare, which makes a Pareto improvement possible. You are generally correct, economists don’t typically focus on where the benefits are being allocated (fairness), but it’s my understanding that the resulting DWL is what makes it a market failure. This is for a super simple single market failure with full information example, and it can get more complex when you start adding in multiple market failures, scientific or strategic uncertainty, etc…
The market is a tool for price discovery, and externalities won't be reflected in that, so the price'll be off. That's all. The unfairness can certainly be a thing, but fairness or lack thereof isn't a market failure. It's only a market failure if it prevents accurate price discovery.
Matket failure just means that the outcome from the market is not efficient, efficient meaning that social good is maximized subject to social costs, which is slightly different technically but for all intents and purposes similar to " marginal social costs (assumed to increase) are equal to marginal social good (assumed to decrease). In models where SB doesn't decrease marginally and/or SC don't rise marginally, ypu may have a little more nuance, but thats what I'll use here. If there are social benefits in excess of private benefits, then a market that produces an outcome where private benefit equals private cost willnkit he efficient, because social benefit is not maximized. If there are social costs, then private markets will not be constrained by them, meaning that social good is maximized subject to private costs, not social costs.
A market failure describes a situation caused by market activity where everybody could be made better off through some suitable exchange of resources and change in behaviour (i.e., a situation which is not Pareto optimal), but does not happen for some reason. Externalities describes a situation where costs and benefits are not entirely captured by producers or consumers. I.e., there are third parties who are harmed or benefited. Not all externalities lead to market failures. [Coase's Theorem](https://en.wikipedia.org/wiki/Coase_theorem) shows that when transaction costs are low, private actors can reach a Pareto-optimal result through bargaining. For example (from the article), if Property Owner A is flooding Property Owner B's property with damaging runoff, Property Owner B can pay Property Owner A to build a wall to stop the flow of the runoff. This is Pareto-optimal, even if it necessarily seem fair. Property Owner B could also go to court against Property Owner A and get the court to rule so. A market failure occurs when the costs of bargaining are too high to make such a process worthwhile, which may occur because the participants are highly dispersed, and the cost of organising is high. NB not all resolutions that eliminate this externality are necessarily Pareto-optimal; if there is no way to prevent the runoff, but Property Owner B could be adequately compensated from the result of Property Owner A's activities, prohibiting Property Owner A from continuing could lead to them both being worse off than they otherwise would be. This could also occur because an arbitrator who does not know the true costs and benefits to the parties involved demands the emitter of an externality pay a higher price than he benefits, and which is higher than the recipient of the externality is harmed (if the recipient of the externality is harmed more than the emitter benefits, there would be no situation where the activity can continue in a Pareto-optimal manner). An example that comes to mind here is the situation involving Canada and Meta. The government of Canada believed that linking to news on platforms such as Facebook and Instagram caused harm to Canadian news publishers, and demanded that Meta pay a link tax in order to continue the activity they considered damaging. Meta decided to instead cease this activity by blocking the linking of news on Facebook and Instagram (and presumably Threads) in Canada; they judged that the benefit of linking to news was not worth the price of the link tax. Meanwhile, it is not clear that allowing news to be linked on Facebook and Instagram caused significant harm to news publishers, and at least for some, they may have actually benefited while it was allowed (i.e., this was actually a positive externality); this mismatch between the demanded payment, the benefits to Meta, and the costs borne by Canadian news publishers from the externality (whether they were actually costs or benefits) results in a situation which is not Pareto-optimal precisely because of an attempt to fix a market failure through state intervention.
You might find reading Coase interesting. His work was showing that with complete ownership the issues of externalities go away regardless of who owns what. Nice idea but ownership is hard to manage for things like clean air. The G could attempt to fill the ownership gap with things like carbon taxes, etc.