2015] CONFLICTS OF ENTITLEMENTS IN PROPERTY LAW 2391
A. THE COMPLEXITY OF SCENARIOS IN CONFLICTING USES OF PROPERTY AND
The extensive law and economics literature that jointly analyzes property
rules and liability rules as legal means to allocate and protect entitlements1 in
the nuisance context typically consider relatively simple forms of property
rules and liability rules. In more recent years, scholars’ exploration of more
complex rules, especially in the form of put-option-like alternatives, has raised
considerable interest.2 The related law and economics literature dealing with
the control of externalities3 typically adds regulation and taxes to the simple
property rules and liability rules as instruments for controlling harmful
When one examines in detail the rules in place in the law of nuisance—
one of the classical building blocks of property law, and one that directly
addresses conflicting uses by entitlement holders over neighboring tracts of
land—the picture seems to get less structured and more complicated.4 At least
in many European jurisdictions (for instance, in Germany and Spain, along
1. See generally Lucian Arye Bebchuk, Property Rights and Liability Rules: The Ex Ante View of
the Cathedral, 100 MICH. L. REV. 601 (2001) [hereinafter Bebchuk, The Ex Ante View of the
Cathedral]; Richard R.W. Brooks, The Relative Burden of Determining Property Rules and Liability Rules:
Broken Elevators in the Cathedral, 97 NW. U. L. REV. 267 (2002); Guido Calabresi & A. Douglas
Melamed, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 HARV. L. REV.
1089 (1972); Keith N. Hylton, Property Rules and Liability Rules, Once Again, 2 REV. L. & ECON. 137
(2006); Louis Kaplow & Steven Shavell, Property Rules Versus Liability Rules: An Economic Analysis,
109 HARV. L. REV. 713 (1996); Lucian Arye Bebchuk, Ex Ante Investments and Ex Post Externalities
(Harvard Olin Discussion Paper No. 397, 2002) [hereinafter Bebchuk, Ex Ante Investments and
Ex Post Externalities], available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=297091.
2. See generally IAN AYRES, OPTIONAL LAW: THE STRUCTURE OF LEGAL ENTITLEMENTS
(2005); Ronen Avraham, Modular Liability Rules, 24 INT’L REV. L. & ECON. 269 (2004); Ian Ayres
& J.M. Balkin, Legal Entitlements as Auctions: Property Rules, Liability Rules, and Beyond, 106 YALE L.J.
703 (1996); Ian Ayres & Paul M. Goldbart, Optimal Delegation and Decoupling in the Design of Liability
Rules, 100 MICH. L. REV. 1 (2001); Lee Anne Fennell, Property and Precaution, 4 J. TORT L. 1
(2011); James E. Krier & Stewart J. Schwab, Property Rules and Liability Rules: The Cathedral in
Another Light, 70 N.Y.U. L. REV. 440 (1995); see also Yun-chien Chang, Optional Law in Property:
Theoretical Critiques, 9 N.Y.U. J.L. & LIBERTY (forthcoming 2015), available at http://papers.
3. For early examples, see generally R. H. Coase, The Problem of Social Cost, 3 J.L. & ECON. 1
(1960); A. Mitchell Polinsky, Controlling Externalities and Protecting Entitlements: Pro perty Right,
Liability Rule, and Tax-Subsidy Approaches, 8 J. LEGAL STUD. 1 (1979) [hereinafter Polinsky,
Controlling Externalities and Protecting Entitlements]; A. Mitchell Polinsky, Resolving Nuisance Disputes:
The Simple Economics of Injunctive and Damage Remedies, 32 STAN. L. REV. 1075 (1980)[hereinafter
Polinsky, Resolving Nuisance Disputes].
4. The relative complexity of nuisance law vis-à-vis other areas of property law, such as
trespass, is a relevant dimension in the analysis of Thomas W. Merrill, Trespass, Nuisance, and the
Costs of Determining Property Rights, 14 J. LEGAL STUD. 13, 23–26 (1985). Merrill conceives the law
of nuisance as a judgmental—and not mechanical—entitlement determination scheme. Id.