If a market experiences underproduction due to a positive externality, what is the underlying cause of this market failure?

When a market experiences underproduction due to a positive externality, it means that the benefits of a good or service extend beyond the individual consumer to others in society. This occurs because the producers and consumers do not take into account the additional benefits that their actions create for others. For example, consider a company that plants trees in a neighborhood; the trees provide clean air and shade, benefiting everyone nearby. Because the company only sees the profit from selling the trees and not the broader benefits they offer, they may not produce enough trees to meet society's needs. This lack of awareness leads to less production than what would be socially optimal, resulting in market failure.