Property Rights and Incomplete Contracts: Dealing with Nuisance
AbstractA model of externalities with sequential location choice is developed. The first mover decides on location before it knows the identity of the second mover. Joint location results in a negative externality. The court, having limitd information, allocates property rights over the externality based on the limiting of location. Sufficient conditions are presented supporting the 'coming to the nuisance' dotrine, where the first mover is given property rights. This doctrine is nit always supported: greater surplus may be generated by giving property rights to the second mover. A sufficient condition guaranteeing optimality for any property rights allocation is derived.
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Bibliographic InfoPaper provided by Australian National University - Department of Economics in its series Papers with number 308.
Length: 45 pages
Date of creation: 1996
Date of revision:
Contact details of provider:
Postal: THE AUSTRALIAN NATIONAL UNIVERSITY, DEPARTMENT OF ECONOMICS, RESEARCH SCHOOL of PACIFIC STUDIES, RESEARCH SCHOOL OF SOCIAL SCIENCES, G.P.O. 4, CANBERRA ACT 2601 AUSTRALIA..O. BOX 4 CANBERRA 2601 AUSTRALIA.
Web page: http://economics.anu.edu.au/economics.htm
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PROPERTY RIGHTS; INFORMATION;
Find related papers by JEL classification:
- K11 - Law and Economics - - Basic Areas of Law - - - Property Law
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
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