> Even without limited liability, it's just not really illegal to pollute. If your pollution increases my risk of lung cancer by 250%, that is something that has a cost. You can put a dollar value on that statistical probability. But you can't sue over it, because by and large outside of medical malpractice it's nearly impossible to sue for statistical injuries.

Bodily harm is not the only form of harm for which one may be liable. Repeated dispersal of unwanted waste upon other's property could be considered property damage, even if the waste cannot or has not yet caused exposure related medical conditions upon their person.

In an alternate legal context, a society might decide that proving an ash residue repeatedly collected on your property matches ash repeatedly emitted by a factory is sufficient grounds for property damage litigation without requiring you to also prove bodily harm. However, this would raise costs on industry by requiring them to be located further from residential areas.

Different societies will arrive at different tradeoffs and balances on these issues through the use of non-market forces, which will influence the incidence of negative externalities as much as market forces.