An excellent essay on the topic of market failures, and the reason why it's a completely spurious argument against the free market. Here's a particularly juicy bit:
In other words government intervention is legitimate whenever anyone ever does anything, without explaining how the government is supposed to determine how to correct the failure or how it is even known there is a failure.Government officials are even less constrained than economists by the unenforced customs or canons of a value-free science. One encounters all sorts of government studies and policies, often written by economists, that build upon the foundation of market failure. For example, the following justification for government is extracted from a report to the European Commission: "A higher, all-enveloping level – such as the State – should carry out activities that cannot be performed efficiently by the market, or that should not be performed by it because of the nature of these activities. In other words public authorities are to take action when market failures arise. Markets fail to achieve an efficient outcome when competition is imperfect, when information is incomplete, when there are public goods to be produced, when production induces externalities, or when the markets face uncertainty. Equity considerations can also call for government intervention."
Like divine right and democracy, market failure is nothing more than an attempt to legitimize the rule of an elite over the population.