Question

It’s important to note that sometimes private solutions to externalities do not work. for example, this occurs when communications barriers or social customs are important enough relative to the potential gains involved that

Answer 1

............................... are important enough relative to the potential gains involved that THE PRIVATE SOLUTION IS NOT FEASIBLE.
Private solution may not be feasible for many reasons, such as transaction cost, coordination problem, unyielding attitude of the people involved, etc.