Tuesday, December 28, 2021

Coasian Quote of the Day

The quote of the day comes from an appeals court opinion of 1983: Carpenter v. Double R Cattle Co., 105 Idaho 320 (1983). The case is about smells coming from a cattle feedlot operation.

Although the problem of externalities affects both goals of efficiency and distributive justice, these objectives are conceptually different and may imply different solutions to a given problem. In theory, if there were no societal goal other than efficiency, and if there were no impediments to exchanges of property or property rights, individuals pursuing their economic self-interests might reach the most efficient allocation of costs and benefits by means of exchange without the direction by the courts. See Coase, The Problem of Social Cost. . . .However, the real world is not free from impediments to exchanges, and our economic system operates within the constraints of a society which is also concerned with distributive justice. Thus, the courts often are the battlegrounds upon which campaigns for efficiency and distributive justice are waged. (330-331)


Practically all human activities unless carried on in a wilderness interfere to some extent with others or involve some risk of interference, and these interferences range from mere trifling annoyances to serious harms. . . .Liability for damages is imposed in those cases in which the harm or risk to one is greater than he ought to be required to bear under the circumstances, at least without compensation. (333)