The Dichotomy between Property Rules and Liability Rules: Experiences from German Law

German Working Papers in Law and Economics, Paper 12, Vol. 2008, 21 Seiten

18 Pages Posted: 20 May 2012

See all articles by Hans-Bernd Schäfer

Hans-Bernd Schäfer

Bucerius Law School; University of Hamburg

Claus Ott

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: 2008

Abstract

Calabresi and Melamed delivered a powerful theory to explain under what conditions it is economically efficient to transfer a property right by voluntary and alternatively by involuntary transactions. In the first instance, the property right should be protected by a property rule or an injunction as well as by criminal law sanctions in order to prevent involuntary transactions altogether. In the second instance, it should be protected only by a liability rule that provides compensation for involuntary transactions. Their theory is normative in the sense that they defend involuntary transactions under one set of conditions and voluntary transactions under another. However, their analysis is also analytical insofar as it predicts an evolutionary pressure on legal norms to encourage voluntary or involuntary transactions if the conditions, which they identified, are met. This article describes two diametrically opposed legal changes in Germany. In nuisance law, the development was from voluntary to involuntary transactions, while in privacy law it was from involuntary to voluntary transactions. We try to make it clear that these developments were triggered by the underlying causes that Calabresi and Melamed identified in their seminal paper on property rules vs. liability rules.

Suggested Citation

Schaefer, Hans-Bernd and Ott, Claus, The Dichotomy between Property Rules and Liability Rules: Experiences from German Law (2008). German Working Papers in Law and Economics, Paper 12, Vol. 2008, 21 Seiten, Available at SSRN: https://ssrn.com/abstract=2062783

Hans-Bernd Schaefer (Contact Author)

Bucerius Law School ( email )

Jungiusstr. 6
Hamburg, 20355
Germany

University of Hamburg ( email )

Allende-Platz 1
Hamburg, 20146
Germany

Claus Ott

affiliation not provided to SSRN ( email )

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