It seems to me that the failing of the Market is due (in part) to the inability for instantaneous adjustments (yes, there's need; but the product doesn't instantaneously appear to fill it, and by the time it does, the need might have changed substantively). Further, the concept of externalities seems to depend on being able to neglect what's outside a system: if there's a closed system and a firm that uses human labor makes a product but destroys all the clean water, that's an externality at least at first, but obviously eventually no one will be able to drink resulting in no laborers and no product. But on Day 1, that cost isn't included in the profit structure (and this is an extreme example, but obviously more ambiguous ones exist).
Can anyone either explain this to me, or point me to a paper or website (or more than one)?
Feel free to explain where you believe I'm wrong, though as this is far outside my area of expertise, I'd appreciate it if you speak simply.
Thanks