Download this Paper Open PDF in Browser

Transaction Costs and Property Rights: Or Do Good Fences Make Good Neighbors?

37 Pages Posted: 17 Nov 1997  

Richard A. Epstein

New York University School of Law; Stanford University - Hoover Institution on War, Revolution and Peace; University of Chicago - Law School

Date Written: November 13, 1997

Abstract

This essay takes off on the famous phrase "good fences make good neighbors" from Robert Frost's poem "The Mending Wall" to explore the function of boundaries in setting up property rights. The first section of the paper begins by exploring how boundaries create spaces where individual decisions can be made without the costs of collective action. It then examines how this extreme separation can lead to the duplication of resources, which in turn prompts customary practices that allowed for shared space at the boundary lines which work to the mutual advantage of the two (or more) parties who share common boundaries. It gives illustrations from customary agricultural practices and the law of nuisance to explain why common law boundaries should be understood to be semi-permeable instead of absolute.

JEL Classification: D23, H41

Suggested Citation

Epstein, Richard A., Transaction Costs and Property Rights: Or Do Good Fences Make Good Neighbors? (November 13, 1997). Available at SSRN: https://ssrn.com/abstract=36840 or http://dx.doi.org/10.2139/ssrn.36840

Richard A. Epstein (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012
United States
(212) 992-8858 (Phone)
(212) 995-4894 (Fax)

Stanford University - Hoover Institution on War, Revolution and Peace

Stanford, CA 94305-6010
United States

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
773-702-9563 (Phone)
773-702-0730 (Fax)

Paper statistics

Downloads
1,059
Rank
15,996
Abstract Views
6,361