Too much output is produced by the individual firms. Too much output is produced in the market as a whole at too low a price. Private decision makers make decisions based on private benefits. When they fail to take into account social benefits, the market outcome is not the efficient outcome. When social benefits exceed private benefits a positive externality is said to exist.
Positive externalities are beneficial.
The market outcome produces too little and the price is too low compared with the efficient outcome. When property rights are well defined it is possible to negotiate their party effects. If property rights are held by the polluter then the third party affected by the pollution will be willing to pay the polluter something not to pollute. The polluter now has a financial incentive to reduce pollution. If property rights are held by the third party, they can charge the polluter for pollution created.