Forthcoming in ENCYLOPEDIA OF LAW AND ECONOMICS, edited by Jürgen Backhaus, 2015
17 Pages Posted: 11 Oct 2014
Date Written: October 9, 2014
This essay sets out the law and the economic theory of nuisance. Nuisance law serves a regulatory function: it induces actors to choose the socially preferred level of an activity by imposing liability when the externalized costs of the activity are substantially greater than the externalized benefits or not reciprocal to other background external costs. Proximate cause doctrine plays a role in supplementing nuisance law.
Keywords: torts, law and economics, nuisance, economic theory of nuisance, nuisance law, optimum activity levels, stict liability, externalized risks, externalized benefits, background risks
JEL Classification: K00, K13, K19, K39
Suggested Citation: Suggested Citation