Property Rights and Incomplete Contracts: Dealing with Nuisance

R. Pitchford and Christopher Snyder

Working Papers from Australian National University - Department of Economics

Abstract: A 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.

Keywords: PROPERTY RIGHTS; INFORMATION (search for similar items in EconPapers)
JEL-codes: C78 D23 H23 K11 (search for similar items in EconPapers)
Pages: 45 pages
Date: 1996
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:fth:aunaec:308

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