Private property rights and the resolution of externality through the market process

Abstract

This paper aims to carry out a narrative review of the market and its possible failures commonly cited in mainstream economics texts and studies that, even when they argue against state interference in the economy, justify exceptions based on market failures. So, choosing one of the most commonly cited market failures - the externalities - this paper analyzes how this problem would be solved (and even not created) by the precise definition of private property rights and by the free market through theoretical review by mainstream economics authors and the Austrian School on markets, market failures, externalities, among others. Thus, making the rationale of mainstream economics evolve by correcting it through Austrian School praxeology and show that a market solution through precise private property rights to the problem of externalities is more efficient both in avoiding it and in solving it if it occurs.