I'd suggest this article as a better libertarian treatment of market failure:

"Market Failure: An Argument for and Against Government"

http://www.daviddfriedman.com/Machinery_3d_Edition/Market%20...

David Friedman doesn't deny that market failures exist, but he points out that the exact same economic phenomenon happens with government, and there's no inherent reason why government is more or less susceptible to it than markets.

No, what they say is, failures will occur but markets can heal themselves better than government intervention.

But that is pretty much an unfalsifiable claim, which puts it quite strongly into the "faith-based ideology" category.