Earlier quoted context omitted.
I don't think any serious free market advocate thinks the government doesn't have a place in restricting and producing negative and positive externalities, respectively. A free market generally means one where one's control over their person and private property is not restricted as long as that control is not being exercised to violate other's equal right to their person and private property, and to the commons . Bu…
Distilled down to its essence a free market grants you protection from involuntary transactions and access to voluntary transactions. Externalities are involuntary transactions, from a free market perspective they aren't any different from robbery or the dreaded... taxes. However, taxes are collected by the government that our population has voted in (in democratic nations). This is also why we prefer government mono…
The incredible thing is that these free-market-respecting taxes are found by economists to have zero negative effects on economic efficiency:
https://en.wikipedia.org/wiki/Land_value_tax
They are also very easy to administer and impossible to evade - thus extremely fair - and do not require creating a surveillance state to monitor private economic interactions, as a sales or income tax do.