Property law usually addresses encroachments with ejectment. Building encroachments differ, however, as restoring a landowners property claims implies the reversal of often large costs sustained by the builder. The authority thus confronts the following dilemma: either it stands by the landowner, thereby facing the social costs of undoing significant investments and possibly supporting an opportunistic landowner that tries to hold up the builder, or it defends the investment of the builder thereby endorsing a kind of private eminent domain. In addressing building encroachments, national property laws have deployed different remedies ranging from a property rule in favor of the landowner to a property rule in favor of the builder with a variety of liability rules, often hybridized with property rules, in between. This paper models the builder-owner conflict after the theory of optional law (Ayres, 2005); it frames different national solutions into a common analytical setting; and it evaluates the different laws in their relative allocative and distributive outcomes and their capacity to constrain opportunistic behavior.
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Volume (Year): 5 (2009)
Issue (Month): 1 (November)
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References listed on IDEAS
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- Gary S. Becker, 1974.
"Crime and Punishment: An Economic Approach,"
in: Essays in the Economics of Crime and Punishment, pages 1-54
National Bureau of Economic Research, Inc.
- Williamson, Oliver E, 1973. "Markets and Hierarchies: Some Elementary Considerations," American Economic Review, American Economic Association, vol. 63(2), pages 316-325, May.
- Jeong-Yoo Kim, 2003. "A Proposal for a New Rule of Adverse Possession," European Journal of Law and Economics, Springer, vol. 16(3), pages 289-301, November.
- Hylton Keith N, 2005. "The Theory of Penalties and the Economics of Criminal Law," Review of Law & Economics, De Gruyter, vol. 1(2), pages 175-201, September.
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