Barking dogs is an example of externality I have encountered. Barking dogs causes negative externality because when the dogs of my neighbor bark their noise creates a disturbance. Moreover, negative externality arises because my neighbor does not incur the full cost of noise and hence makes no effort to prevent the dogs from barking.

Government intervention in the market sometimes tends to worsen the existing issues. For instance, when the government introduces a rent cap, the number of houses the landlords are willing to supply declines, and the tenants end up suffering more due to the shortage. Also, the minimum wage by the government often increases unemployment.