The question of externalities, its implications and the failure of the market in the economy"The word externalities was created by Arthur Cecil Pigou (1877-1959 ), which was developed earlier by fellow English economists Henry Sidgwick (1838-1900) and Alfred Marshall (1842-1924), an important part of modern economic theory” (1) In a market economy, this means. generally that an externality occurs when there is a direct effect of the actions of one person or company on the well-being of another person or company in a way that is not transmitted through prices This externality can result from the effects that the consumption of a good by a consumer can have on the well-being of others or from the effects that the production of a product can have on the production possibilities of others. As a result, in a competitive market, too much or too little of a good will be consumed from society's perspective. There are two types of externalities, positive externalities and negative externalities. “Positive externalities exist when the marginal social benefit (MSB) of production and/or consumption exceeds the marginal private benefit (MPB), that is, production and/or consumption generate benefits external which may be undervalued by the market Examples include industrial training by companies, research by companies on new technologies, education, etc. (2)For example, as of June 16, 2004, entomologists described and named more than 1,000,000 insect species. In the UK, it has been estimated that the value of pollination services provided by honeybees and bumblebees is around £170 million for outdoor crops (fruit, rapeseed, etc.) and £30 million of pounds sterling for greenhouse crops (tomatoes, peppers, etc.). . However, bee populations in the UK are declining. Commercial beekeeping operations have been hit by infestations of a tiny arachnid called varroa. This mite has caused some beekeepers to lose 90% of their hives. It's not good news for Britain's wild bees either. The decline in bee populations is so dramatic that the public is being urged to help, as part of National Insect Week. » (3) Where significant positive externalities exist, the good is under-consumed or under-supplied, because the free market fails to take their effects into account. In fact, the marginal social benefit from consuming the good is greater than the marginal private benefit. In case of external benefits of production, the marginal social cost would be the marginal private cost..