reasons externalities often emerge:

Externalities often emerge when private actors fail to internalize the costs or benefits of their actions. These externalities are a type of market failure that occurs when the market fails to take into account the full costs or benefits of an economic activity. Externalities can be positive or negative and may be caused by a variety of factors such as production, consumption, and/or trading. Common examples of externalities include air pollution from factories, noise pollution from traffic, and water pollution from agriculture. When externalities are not taken into account, private actors may find it more economically attractive to engage in activities that generate negative externalities, leading to a negative impact on overall social welfare. This can happen when external costs of an activity are greater than the benefits to the actors involved, or when private actors fail to consider the costs or benefits to those affected by their actions.