Unless rights with respect to those externalities are as well defined (and reasonable) as the other property rights that are enforced.

Of course, the typical libertarian, in my experience, incorrectly classifies such tradeable pollution rights (i.e. where the total permitted right to pollute is kept low and can be traded between polluters) as evil evil evil terrorist regulation.

Actually, that disagreement pretty much describes 18 months of my interaction with Bob Murphy, starting a month before this.