You didn’t remark on regulation. I can think of two important reasons why neo-liberals should favor the right kind of regulation:

(1) Mitigate externalities. This cuts two ways: IP protection attempts to privatize the public value of innovation in order to properly incentivize it, and carbon taxes and the like attempt to privatize the public cost of pollution and other harms in order to properly disincentivize it.

(2) Build confidence and manage risk by improving the effectiveness of law enforcement. Consider a world without pharmaceutical regulation. If a drug maker creates a dangerous drug that kills people, it is a challenge to determine and enforce accountability. For one, the drug maker cannot truly make the harmed parties whole (that’s one breakdown of market efficiency). More than that, assessing responsibility requires a trial in which the stakes are homicide. It stretches imagination to think that juries will come to the correct conclusions frequently enough for tort to create market efficiency. Drug development regulation makes it easier to hold drug makers accountable by making it easier to demonstrate the illegality of bad behavior; at the same time it gives drug makers cover for bad outcomes when they can demonstrate good-faith conformity to the rules. Collectively these build confidence leading to a stronger market.