Market failure is a situation in which the allocation of goods and services by a free market is not efficient. This often occurs because of the presence of externalities, or costs and benefits that are not accounted for by market transactions. One common example of market failure is pollution, as polluting industries often do not bear the full cost of the damage they cause to the environment. _________ government intervention, such as the implementation of environmental regulations or a carbon tax, can help to correct these inefficiencies and improve overall welfare.