# Market failures are coupled to externalities Market failures happen when individuals either do not do a beneficial activity because they cannot capture enough value from a positive externality or they do too much of a detrimental activity because they are not responsible for a negative externality. There is a lot of focus on the negative externality piece of market failure: * Tragedy of the commons * Pigouvian tax <!-- #stub --> [Web URL for this note](http://notes.benjaminreinhardt.com/Market+failures+are+coupled+to+externalities) [Comment on this note](http://via.hypothes.is/http://notes.benjaminreinhardt.com/Market+failures+are+coupled+to+externalities)