Thursday, March 23, 2006
Eric Claeys (St. Louis University - School of Law) has posted Jefferson Meets Coase: Train Sparks, Natural Rights, and Law and Economics on SSRN. Here's the abstract:
This Essay uses train-sparks negligence cases to highlight tensions between traditional American tort common law and post-Coasean law and economics. In a train-sparks case, a railroad prima facie liable for negligence argues that the plaintiff was contributorily negligent by putting his stacks too close to the railroad’s tracks. Coase and other economists use such cases to illustrate standard economic analysis of torts problems, particularly bilateral incompatible-use disputes. The best common-law decisions in such cases use American natural-law/natural-rights theory to anticipate modern economic arguments - particularly Coase’s insight that common-law harms and benefits are merely reciprocal economic externalities.
The Essay argues that the difference between the common law/natural-rights approach and the economic approach to torts is primarily a difference between fundamentals and fine tuning. The leading common law train-sparks cases preferred fundamentals. They generated a hard distinction between harms and benefits because they designed property rights primarily to secure owners’ investment and labor and to accommodate the many conflicting uses to which similar property assets are put. By contrast, post-Coasean torts law and economics prefers fine-tuning. It prefers to view disputes through the reciprocal-externality paradigm because it seeks to maximize the total product of the competing property uses. That focus on productive efficiency, however, abstracts away from less quantifiable but still important policy concerns about investment and ordering.
The Essay teaches two important lessons. First, it suggests that moral theories of property can develop considered responses to the skepticism many economists show toward moral harm-benefit distinctions. Second, it suggests that law and economists might want to consider other forms of efficiency when they analyze bilateral incompatible use conflicts. Coase and others have focused mainly on productive efficiency; complete economic analysis might also want to consider dynamic efficiency and the efficient minimization of the information costs associated with private property.
[Comments are held for approval, so there will be some delay in posting]