Let us be quite clear: your "free market solution" is to demand that the guy bear the costs for the activities of his neighbor. That is extortion, not the free market.
Utter nonsense. You embarrass yourself with this tripe.
I have a history of respiratory infections and have had asthma attacks. I am also sensitive to chemical pollutants. I don't like using air conditioning or heat unless absolutely necessary, preferring fresh air, not to mention keeping the bills down, and live in a climate where neither is really needed much of the year. Problem is, there is a paper mill on the south side of town and many times, when the wind is right, the smell, along with whatever toxic chemicals may be in the air, gets to be overwhelming and it is just about impossible to breathe and I have to close the windows and turn on the AC. And all this time I didn't realize that what I really should be doing is suing the paper mill for posing a threat to my health and causing my electric bill to skyrocket.
The point is, unless you are independently wealthy, anywhere you live is going to come with things you don't like and are not necessarily healthy. You choose the trade offs. If later you decide you can't handle it, you move. You don't impose your will on everybody else.