Private markets fail to account for externalities because decision makers in the market fail to take account of the external effects of their behavior.
Hence, option C is the right answer.
Investments made in assets not listed on a public exchange or stock market are known as private markets. This might include, for instance, direct lending from investors to borrowers in the absence of a market for trading the debt, or private debt, which refers to investments made in private enterprises.
The fact that private equity investors are often compensated through distributions rather than stock accumulation is one of the greatest distinctions between private and public equity. Since the majority of publicly traded equities are available and simple to trade every day through public market exchanges, public equity has the benefit of being liquid.
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