What is a primary cause of market failure that may necessitate government intervention?

One primary cause of market failure is the presence of externalities, which are costs or benefits that affect people who did not choose to be involved in a transaction. For example, consider a factory that pollutes a river while producing goods. The factory may benefit from lower production costs, but the people living downstream suffer from dirty water, which can harm their health and environment. In this case, the market does not account for the negative effects of pollution, leading to overproduction of harmful goods. Government intervention, like imposing regulations or taxes on pollution, can help correct this failure and ensure that the costs are reflected in the market, benefiting everyone.