Music: The Mamas and the Papas: Greatest Hits (1965-68)

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Music The Mamas and the Papas Greatest Hits
(1965-68)

• Aluminum Mullett Briefs Face Down on Table
• Updated Assignment Sheet Posted
• Radium Manning Briefs Now Due Friday
• Lunch Tuesday BOYNE EPSTEIN MARGOLIS
  McCARTHY SCHWARZBERG SEARNS SHAFRIR

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New Issue in Mullett Escape

• GENERALLY WHEN DOES OWNER OF ESCAPED ANIMAL LOSE
  PROPERTY RIGHTS?
• Why Different from Watch or Ring?
• What Facts are Relevant?

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New Issue in Mullett Escape

• Different from First Possession (Where All 3
  Cases Ask Similar Qs)
• Escape Cases Focus on Different Concerns
• Mullett Applies English Common Law Rule
• Manning Fact-Specific Result Not Using English
  Common Law Test

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OXYGEN DQ28

• Assume that we are in a world where the
  net-owners have no enforceable rights in fish
  caught in their nets until they physically remove
  the fish from the nets. Thomas chooses to take
  fish from the owners nets. Who is affected by
  this decision?

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EXTERNALITIES

• Cost or benefit external to a decision-making
  process
• Must be w reference to particular decision
• helpful to start by identifying decision maker
• If decision-maker considers a cost, but chooses
  to absorb it, not an externality
• E.g., Thomas considers own exertion necessary to
  take from nets, may decide to take anyway

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EXTERNALITIES

• Likely Externalities in DQ28 Shaw hypo
• Costs to net-owners their families
• Loss of availability to purchasers from
  net-owners
• Effects on net manufacturers
• Effects on fish food chain (might be benefits
  if net-fishing discouraged)

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EXTERNALITIES

• Internalizing Externalities Forcing
  Decision-Maker to Consider

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EXTERNALITIES

• Internalizing Externalities Forcing
  Decision-Maker to Consider
• DQ30 (Krypton) Examples of Internalizing from
  Outside Reading?

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EXTERNALITIES

• Internalizing Externalities Forcing
  Decision-Maker to Consider
• Beneficial Because Means Price of Activities Will
  Reflect Real Cost (e.g., pollution costs)

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EXTERNALITIES

• Internalizing Externalities Forcing
  Decision-Maker to Consider
• Beneficial Because Means Price of Activities Will
  Reflect Real Cost
• Can Internalize Several Ways
• Require Payment of Damages
• Criminalize Activity
• Private Negotiotiation (Bribes)

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OXYGEN DQ28

• If the fish are worth more to the net-owners than
  to Thomas, presumably there is some amount of
  money they could contract to pay him to leave the
  fish alone that would leave all parties better
  off than before the contract. What obstacles
  stand in the way of the parties entering this
  contract?

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OXYGEN DQ28

• What obstacles stand in the way of the parties
  entering this contract?
• Assume cost to net-owner is 500/wk benefit to
  Thomas is 300/wk.
• Assume One-on-One Negotiation.

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Costs of One-on-One Negotiation

• Investigation Costs
• Bargaining Costs
• Strategic Behavior
• Enforcement Costs

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OXYGEN DQ28

• What obstacles stand in the way of the parties
  entering this contract?
• Assume cost to net-owner is 500/wk benefit to
  Thomas is 300/wk.
• Assume Multi-Party Negotiation.

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Additional Costs of Multi-Party Negotiation

• Free-Riding
• Holdouts
• Organization/Management Costs

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Collectively Transaction Costs

• Investigation Costs
• Bargaining Costs
• Strategic Behavior
• Enforcement Costs

• Free-Riding
• Holdouts
• Organization/Management Costs

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Transaction Costs Can Prevent Parties from
Reaching Bargains that are Efficient ( Would
Make Everyone Better Off)
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DQ32 Costs of Internalization?

• costs of bargaining privately
• costs of collectively creating new rules (can be
  very expensive)
• multi-party negotiation
• legislation

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Basic Demsetz Analysis 1st Thesis

• Identify decision at issue

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Basic Demsetz Analysis 1st Thesis

• Identify decision at issue
• Identify old rule

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Basic Demsetz Analysis 1st Thesis

• Identify decision at issue
• Identify old rule
• Identify neg. externalities under old rule

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Basic Demsetz Analysis 1st Thesis

• If cost of externalities gt
• cost of change ?
• change in rule

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Basic Demsetz Analysis 1st Thesis

• If cost of externalities gt cost of change ?
  change in rule
• Rough Approximation (Not Precise Math)

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Basic Demsetz Analysis 1st Thesis

• If cost of externalities gt cost of change ?
  change in rule
• Rough Approximation (Not Precise Math)
• Resulting Change in Rule Unpredictable

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Basic Demsetz Analysis 1st Thesis

• If cost of externalities gt cost of change ?
  change in rule
• Rough Approximation (Not Precise Math)
• Resulting Change in Rule Unpredictable
• Often Results from Social/Cultural Change
• New Social Habits ? Scarcity
• New Science/Technology ?
• Scarcity or Better Monitoring

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Basic Demsetz Analysis 1st Thesis

• Identify decision at issue
• Identify old rule
• Identify neg. externalities under old rule
• Identify change in circumstances

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Basic Demsetz Analysis 1st Thesis

• Identify decision at issue
• Identify old rule
• Identify neg. externalities under old rule
• Identify change in circumstances
• Does change increase neg. externalities?

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Basic Demsetz Analysis 1st Thesis

• Identify decision at issue
• Identify old rule
• Identify neg. externalities under old rule
• Identify change in circumstances
• Does change increase neg. externalities?
• If cost of externalities gt cost of change ?
  change in rule

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DQ33 Uranium Apply to Montagne

• Identify decision at issue
• Identify old rule
• Identify neg. externalities under old rule
• Identify change in circumstances
• Does change increase neg. externalities?
• If cost of externalities gt cost of change ?
  change in rule

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DQ34 Uranium

• Why does the author believe that the tribes of
  the Southwestern U.S. did not adopt a system
  similar to that of the Montagne?

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DQ35 Uranium Apply to Development of Air
Pollution Regs

• Identify decision at issue
• Identify old rule
• Identify neg. externalities under old rule
• Identify change in circumstances
• Does change increase neg. externalities?
• If cost of externalities gt cost of change ?
  change in rule

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DQ35 Apply to Development of Sexual Harassment
Regs

• Identify decision at issue
• Identify old rule
• Identify neg. externalities under old rule
• Identify change in circumstances
• Does change increase neg. externalities?
• If cost of externalities gt cost of change ?
  change in rule

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Demsetz Second Thesis

• Over Time, Process Described in 1st Thesis Leads
  to More and More Private Property

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Alternatives to Private Property

• State of Nature (Can Use Power to Exclude)
• Communal Ownership
• No one can exclude others
• Often Variants on First in Time in Practice
• Can Have Non-Communal State Ownership
• e.g., Military Bases
• Like Private Ppty BUT Govt Management

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Alternatives to Private Property

• State of Nature (Can Use Power to Exclude)
• Communal Ownership
• No one can exclude others
• Often Variants on First in Time in Practice
• Can Have Non-Communal State Ownership
• e.g., Military Bases
• Like Private Ppty BUT Govt Management
• DQ36 Radium Common Examples?

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Demsetz Private Property More Efficient Than
Communal Property

• The members of the community will have trouble
  negotiating among themselves to achieve the
  optimal level of use of the resource.

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Demsetz Private Property More Efficient Than
Communal Property

• The members of the community will have trouble
  negotiating among themselves to achieve the
  optimal level of use of the resource.
• The members of the community will have trouble
  negotiating with other communities or outsiders
  to prevent interference with their rights and
  achieve useful bargains about allocating property
  rights.

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Demsetz Private Property More Efficient Than
Communal Property

• The members of the community will have trouble
  negotiating among themselves to achieve the
  optimal level of use of the resource.
• The members of the community will have trouble
  negotiating with other communities or outsiders
  to prevent interference with their rights and
  achieve useful bargains about allocating property
  rights.
• DQ37 Radium Examples?

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Demsetz Second Thesis

• Over Time, Process Described in 1st Thesis Leads
  to More and More Private Property

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DQ38 RADIUM

• In your experience, do communities have ways of
  preventing anti-community behavior aside from
  bargaining or paying off the anti-social
  community members? Examples?

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DQ38 RADIUM

• If bargaining among members of a community is so
  difficult, how do private property systems get
  created at all?

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WHAT TO TAKE FROM DEMSETZ

• Externalities Important (Want Decision-Makers to
  Consider Real Costs)

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WHAT TO TAKE FROM DEMSETZ

• Externalities Important
• Useful Description of a Way Changes in Society
  Create Changes in Property Rights

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WHAT TO TAKE FROM DEMSETZ

• Externalities Important
• Useful Description of Changes in Property Rights
• Arguments re Advantages of Private Property

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WHAT TO TAKE FROM DEMSETZ

• Externalities Important
• Useful Description of Changes in Property Rights
• Advantages of Private Property
• Description of What Property Is (1st para.)
• Expectations re Rights to Act
• Protection from Others Interference
• Construct of Society/Culture