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The Economics of Nuisance Law

RESEARCH HANDBOOK ON THE ECONOMICS OF PROPERTY LAW, K. Ayotte & H. E. Smith, eds., Edward Elgar, 2009

Boston Univ. School of Law Working Paper No. 09-05

23 Pages Posted: 23 Jan 2009 Last revised: 14 Jul 2010

Keith N. Hylton

Boston University - School of Law

Date Written: January 21, 2009

Abstract

Economic analysis of nuisance law can be divided into two branches: the transaction cost model and the externality model. The two models provide a relatively complete positive theory of nuisance law. Under the externality model, nuisance law optimally regulates activity levels. Nuisance law induces actors to choose socially optimal activity levels by imposing liability when externalized costs are far in excess of externalized benefits or not reciprocal to other background external costs. Proximate cause doctrine plays an important role in inducing optimal activity levels.

Keywords: Nuisance Law, transaction cost model, externality model, proximate cause doctrine, socially optimal activity levels

JEL Classification: K00, K13, K32

Suggested Citation

Hylton, Keith N., The Economics of Nuisance Law (January 21, 2009). RESEARCH HANDBOOK ON THE ECONOMICS OF PROPERTY LAW, K. Ayotte & H. E. Smith, eds., Edward Elgar, 2009; Boston Univ. School of Law Working Paper No. 09-05. Available at SSRN: https://ssrn.com/abstract=1331071

Keith N. Hylton (Contact Author)

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States
617-353-8959 (Phone)
617-353-3077 (Fax)

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