Property

4 March 2005

Nuisance

D&M, pp. 296-98. Text: Basic Rules on Nuisance

D&M, pp. 298-305. Waschak v. Moffat

D&M, pp. 305-10. Questions

D&M, pp. 311-16. Bootner v. Atlantic Cement Co.

D&M, pp. 317-18. Problems

Tighten up Coase analysis

• Coase – from any starting point to optimal point if no transaction costs
• Bicycle factory = Herm
• Residents = Schafermeyer
• Conduct=copying and distributing recording
• So Shafermeyer pays Herm not to copy and distribute=residents paying bicycle factory not to pollute
• How much Shafermeyer is willing to pay defends on his expected net return from having market to himself=f(Schafermeyer expected costs and revenue)
• How much Herm is willing to accept depends on his expected net return=f(Herm costs and revenue)
• Whoever can get the same market penetration at lowest cost will end up doing it
• Societal benefits: music; costs human and capital resources used to produce CDs

But:

• There are wealth effects, and thus distributive concerns, and
• It doesn’t seem fair that Shafermeyer has to pay to prevent “piracy”
• Just like it didn’t seem fair that residents had to pay the polluter
• there are transaction costs
• Herm isn’t the only concern
• Everyone who gets a CD can copy and distribute
• High costs to Shafermeyer from
• Tracking all of them down
• Negotiating a deal with each
• Detecting breaches
• Suing them

Principles (p283)

in the absence of certainty about costs and benefits:

• place costs on party best able to make cost-benefit analysis (maybe Schafermeyer)
• put costs on party best able to avoid (accidents, pollution) (Herm)
• put costs on party who can engage in market action to correct error in status quo with lowest transaction costs (Herm)
• choose market or command to minimize transaction costs (probably command)

Consider Grokster:

• Possible bearers of cost:
• Copyright owner
• File sharing transferee
• File sharing transferor
• Server owner/operator
• Grokster software developer
• Where do rules lead?
• What kind of entitlement(duty) re intermediaries—Grokster ptfs ask for extension of copyright law; heretofore “no law re programmers

Nuisance is mechanism for recognizing entitlements, imposing costs

Nuisance Hypo

Students who were trying to study sue Lahn, Hill, Schafermeyer for nuisance

Quote “rotten eggs on doorstep, rotten eggs in pocket” p305

Studious student=resident

Hill = bicycle plant, or maybe Bair

Conduct=playing guitar inside 565 West Adams

No-law: studious student could pay Hill not to play

Or give studious student entitlement—Hill might pay him to permit playing

Doctrine

P296-297 Restatement (Second) of Torts § 822 (definition of tort); § 827 (gravity of harm factors); § 828 (utility of defendant’s conduct)

What effects of different remedies?

(If time) work through wilderness problem