Private Law Theory

Abstract:
This Article models private ownership as a conflict resolution mechanism and contends that for the Coase Theorem (as defined here) to be consistent, private ownership must yield the Pareto-optimal use of scarce resources among all feasible conflict resolution mechanisms. Conflict over a scarce resource may be better resolved, however, by eliminating the possibility of private ownership and “forcing” parties to share ownership of a contested scarce resource. A corollary to the Coase Theorem is introduced which states: In the absence of transaction costs, the distribution of private and shared ownership is efficient. Provided transaction costs are high and shared ownership is socially-optimal, a role for the courts is suggested wherein de facto shared ownership is established by rendering private property rights random or unclear — judicial behavior that stands in contrast to the normative implications of the Coase Theorem.

Bunting, WC, Resolving Conflict over Scarce Resources: Private versus Shared Ownership (June 5, 2014).

First posted 2014-06-08 06:30:16