[gutnor]

I guess it would work in the magical world of economists. In that world, there would be active competition for the ownership of the rivers (i.e. lots of players) and consumer have perfect information and are rational (i.e. they will avoid product that directly or indirectly cause pollution )

[ceras]

This doesn't reflect the content of any econ course I've taken, nor the views of any of my econ professors. There's a ton of study in economics about the types of effective roles government can play when dealing with positive and negative externalities, and "tragedy of the commons" situations.

Economists that believe everything can be sorted out in the free market are pretty fringe.