Unit 2: Negative externalities associated with cheap road surfaces

The Telegraph has an interesting article about local authorities resurfacing roads cheaply

http://www.telegraph.co.uk/motoring/main.jhtml;jsessionid=4QBBDPHEMP4KVQFIQMGSFFOAVCBQWIV0?xml=/motoring/2008/01/26/mfgrip126.xml

a) Who are the 2 parties involved in the economic transaction?
b) Who are the 3rd parties effected by the negative externalities?
c) What are the negative externalities?
d) How does the market fail?
e) What actions could the local authorities take to reduce the market failure