Chapter 1: Discovery, Capture, Creation Flashcards
Property Rights
Use Possess Exclude Dispose Transfer (Sell, Gift, Direct Disposition)
Law of Capture
Unowned Resource Unowned land/public place First in time Possession Exceptions
Possession
intent to own actual seizure (depravation of natural liberty)
Exceptions
long-standing
socially-industrially favorable
Johnson
Only if you have title to land can you convey it, occupancy does not include possession
Pierson
Mere pursuit insufficient for capture
Ghen
Reasonable local usage gives title to the first taker of whale who acts by appropriation
Keeble
land owners considered prior possessors of wild animals on their land
Rule of capture and wild animals
constructive possession of animals on land
Eliff
Rule of capture does not protect against owner who negligently drills well and destroys resource
Ground water
Was neighbors while in place, but first to capture applies
Solutions to negative externalities
Taxation (high monitoring costs)
Regulation (technology -innovation to reduce emissions or reduce output)
Property rights
Property v. Other Options
Transaction costs, monitoring and enforcement costs, hold out or free riders
Coase theorem
- clearly defined, functional markets, divisible (transferable), and defendable
- resources will flow to highest efficiency
- excludes transaction costs
Farmer and the Fisherman
right to pollute given as property right, if given to fisher farmer is out vice versa, we do have transaction costs
Why private property? (3)
- Greater individual severity
- More immediate/tangible responsibility
- Internalize externalities (diminish in accordance to market and transaction costs)
Examples of possession of farae naturae (3)
- Kill and bag
- Mortally wound and continue to pursue
- Trap and deprive of natural liberty
Ratione Soli says that when ______ is located on ______, the owner of the real property is deemed to be in _______ of that resource while it ______. (4)
- A fugitive resource
- private property
- constructive possession
- remains on the property
Externalities are _____ and ___ of a given action that are not reflected in the ______ of the ______ and ______ (5)
- Indirect costs
- benefits
- direct cost
- goods
- services
The costs of executing a given exchange
Transaction costs
Free rider
a person who necessarily benefits from an exchange who may not be inclined to pay for those benefits
A person whose consent is required for a given action may use that advantage to extract more than is fair from the other actors is a
Holdout
natural resources held in common tend to be over-exploited because future interests and other externalities may not be accounted for in individual decision- making; Demsetz posits that private property better internalizes these externalities
Tragedy of the Commons
Absent transaction costs, if property rights are clearly defined, divisible, and defendable, individuals will bargain for and reach optimal resource allocation regardless of how initial rights are allocated
Coase theorem
(b) Why wouldn’t the Ghen court decide its case just on the basis of the law as stated in Pierson? (And why wasn’t Pierson decided according to the custom of hunters, as Judge Livingston suggested in his dissent in Pierson v. Post?)
(b) The court could have followed Pierson v. Post, but the holding would have upset an entire industry that had operated successfully under the custom of awarding the whale to the person whose iron holds the whale, with a finder receiving a salvage (a reward). The judge limited the custom-as-law holding to cases where the custom had been recognized and acquiesced in for many years, and that undoing the custom may destroy the industry. It also helped that the finder received a salvage for finding the whale and notifying the whaler. Why wasn’t Pierson v. Post decided by custom? The dissent in Pierson wanted to do just that. One argument may be that the custom should be limited to issues unique to an industry, and Pierson and Post were not professional fox hunters. It may be that this custom was not essential to the survival of fox-hunting businesses, even if there was one at the time, or that fox hunting was not critical to the economy of the region. It may be that no one presented evidence as to the custom in the area. It may be that, as the majority stressed, the first-to-kill (or take actual possession) criterion is easier to apply in practice. The custom of hunters, moreover, may not be in the best interests of the wider society—farmers, families, and so on
(c) The Ghen opinion states: “Neither the respondent (Rich) nor Ellis knew the whale had been killed by [Ghen], but they knew or might have known, if they had wished, that it had been shot and killed with a bomb-lance, by some person engaged in this species of business.” What do you think might have been the effect of this trial court finding in Ghen on a case like Pierson?
(c) The judges in Pierson, relying on Ghen, might have said that while in pursuit Post was in constructive possession of the fox for purposes of protecting his right to hunt that fox. If so, the court would have ruled in favor of Post this time. More likely, the majority in Pierson would have distinguished Ghen on the grounds that in Ghen the plaintiff killed the whale. Mere pursuit of a whale conferred no benefit. Pierson’s majority opinion, in (nonbinding) dicta, said that intercepting an animal (fox or whale) so as to deprive it of its natural liberty and make its escape impossible may be considered possession. Using this logic, harpooning and killing a whale is much like “intercepting” it, but sighting and chasing it is not.
Who has possession of the empty underground space left after mining or after the extraction of oil or gas from a cavity in the earth? If oil or gas was injected into the cavity, would the surface owner have a trespass action against the injecting party?
The surface owner regains “possession” of the mined-out space after the minerals have been extracted. It may be a trespass, therefore, when already captured oil or gas is pumped back into the cavity for storage. Another thought, following the rule of wild animals, is that the oil has returned to its natural state (given its “natural liberty” again, if you will), and thus is owned by the first landowner to pump it back out. In that case, the injecting party does not have sufficient possession of it to commit a trespass with it—or, put another way, the surface owner could claim ownership by drilling for the oil himself
Surface water
First in time as well “prior appropriation”
Riparian rights
take little or no account of productivity of water on land
