“This book surveys the case law on property from an economic perspective, with the goal of offering new insights into the resolution of actual legal disputes drawn from several countries. It will be of interest to law professors and students, practicing lawyers with an interest in economics, and economists with an interest in law.” — Thomas J. Miceli, Professor of Economics, University of Connecticut, USA. “This book will be a welcome addition to those who teach law and economics and those of an interdisciplinary disposition. With its primary focus on cases and how Coasian/Post-Coasian economics might give new light to the issues that encapsulate these cases it makes classic economic concepts such as externalities come alive again as ideas to be taken out of the textbooks and experimented with as a practical tool to understand the human condition.” — Daniel Blackshields, School of Economics and Teaching Fellow Reflective Practice, University College, Cork, Ireland; Chair for Academic Standards, Cork University Business School. Economic Analysis of Property Law Cases The discipline of law and economics has earned a reputation for developing plausible and empirically testable theories on the social functions and the impact of legal institutions. Property rights are a field in which this has been very successful. In this book, economic property rights theories are applied to case law in order to examine the practice and solution of real life conflicts. The author examines the economic problems which are dealt with in these cases and evaluate the courts’ decisions from an economic angle. Cases are examined from across the UK, the US, Germany, Belgium and Canada to allow international comparisons to be made. These comparisons reveal that, regardless of the legal system, many legal issues have similar economic roots and therefore similar models of economic analysis can be applied. The analysis of these cases also shows that the discipline of law and economics is not only successful in developing explanatory models but also useful to generate better considerations and solutions for legal conflicts in individual cases. This book aims to bridge the gap between the academic and professional literature and demonstrate the benefits of the economic analysis of property rights cases to all those who are interested in law and economics. Boudewijn R.A. Bouckaert is an emeritus professor at the Law School of Ghent University. He is a guest professor at the Erasmus University in Rotterdam, at the CEVRO-Institute in Prague and at the University of Torino. The Economics of Legal Relationships Sponsored by Michigan State University College of Law Series Editors: Nicholas Mercuro Michigan State University College of Law Michael D. Kaplowitz Michigan State University Predatory Pricing in Antitrust Law and Economics Nicola Giocoli The Role of Law and Regulation in Sustaining Financial Markets Edited by Niels Philipsen and Guangdong Xu Law and Economics Philosophical issues and fundamental questions Edited by Aristides N. Hatzis and Nicholas Mercuro Public Procurement Policy Edited by Gustavo Piga and Tünde Tatrai Legal Origins and the Efficiency Dilemma Nuno Garoupa, Carlos Gómez Ligüerre and Lela Mélon Law and Economics of Public Procurement Reforms Edited by Gustavo Piga and Tünde Tátrai Law and Economics as Interdisciplinary Practice Philosophical, Methodological and Historical Perspectives Péter Cserne and Magdalena Malecka Extraterritoriality and International Bribery A Collective Action Perspective Branislav Hock Economic Analysis of Property Law Cases Boudewijn R.A. Bouckaert For a full list of titles in this series please visit www.routledge.com/The-Econo mics-of-Legal-Relationships/book-series/ELR Economic Analysis of Property Law Cases Boudewijn R.A. Bouckaert First published 2020 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 52 Vanderbilt Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2020 Boudewijn R.A. Bouckaert The right of Boudewijn R.A. Bouckaert to be identified as author of this work has been asserted by him in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record for this book has been requested ISBN: 978-1-138-02167-9 (hbk) ISBN: 978-1-315-77758-0 (ebk) Typeset in Times New Roman by Apex CoVantage, LLC Contents List of figures ix List of tables x Preface xi Introduction 1 1 Definition and extent of property rights 6 1.1 Definition and extent of property rights in the economic theory of law 6 1.2 Case analyses 25 Cases 54 2 Common property 57 2.1 Common property in the economic theory of the law 57 2.2 Case analyses 72 Cases 90 3 Nuisance 93 3.1 Nuisance in the economic theory of law 93 3.2 Case analyses 100 Cases 141 4 Fragmentation of property rights: easements 143 4.1 Fragmentation of property rights and easements in the economic theory of law 143 4.2 Case analyses 150 Cases 169 5 Takings 171 5.1 The economic theory of takings 171 viii Contents 5.2 Case analyses 181 Cases 203 6 Verification of property rights: possession and registration 205 6.1 The economic theory on verification of property rights 205 6.2 Case analyses 215 Cases 228 Index 230 Figures 1.1 Optimal level of monitoring by animal owner 30 1.2 Right to light 36 1.3 Map of lots and alluvium 41 2.1 Economic classification of goods 62 2.2 Optimal commons 65 2.3 Ostrom’s social-ecological systems 67 3.1 Negative externalities 104 3.2 Demand-supply services 109 3.3 Efficient price and service level in sewerage provision 110 3.4 Negative externalities motor circuit 117 3.5 Prisoner’s dilemma: sound isolation 126 3.6 Negative externalities of soccer play 130 3.7 Prevention level: theft of diesel 140 6.1 Efficient time length of prescription period 211