What is an essential role of the government in market economies?

An essential role of the government in market economies is to deal with externalities. An externality is a benefit or cost incurred by third parties in an economic transaction that they do not pay or receive restitution for. An example of an externality that it is the government's role to deal with is pollution, which harms the public overall, but is not included naturally in the price of goods or services. Another essential role of the government in a market economy is to enforce contracts in the event that one party reneges.