Externality:

The existence  of  externality prevents  the  achievement of Pareto optimality even  when perfect  competition prevails. An externality  occurs  in  when  a decision (for example, to pollute the atmosphere) causes costs or benefits to individuals  or  groups  other  than  the  person making  the  decision.  In  other words, the decision-maker does not bear all of the costs or reap all of the gains from her action. As a result,  in a competitive market too much or too little of the good will  be  consumed from  the point  of view  of society. If a company making the decision benefits more than  it does (education, safety), then  the good will be under-consumed by other.  On the other hand,  if the costs to the world exceed the costs to the individual making the choice (pollution, crime), then the good will be over-consumed from society's point of view.