Commercial roadways in communities that lack zoning laws, for example, are often an aesthetic nightmare not because of insufficient competition, and not because merchants are stupid or lack taste. Rather, the problem is that any individual merchant's sign won't be noticed unless it's bigger and more garish than those of rival merchants.
Virtually all families in the middle of the earnings distribution aspire to send their children to a school of at least average quality. (We'd think ill of any parent whose aspirations were lower.) The rub is that the best schools tend to be located in more expensive neighborhoods.
As the great naturalist Charles Darwin saw clearly, individual and collective interests often coincide, as in the invisible hand narrative. But he also saw that in many other cases, interests at the two levels are squarely in conflict, and that in those cases, individual interests generally trump. That simple observation suggests that market failure is often the result not of insufficient competition (the traditional charge from social critics on the Left), but of the very logic of competition itself.