Music: The Beatles: Magical Mystery Tour (1967)

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Music The Beatles Magical Mystery Tour (1967)

• Lunch Office Hours Today Cancelled Ill e-mail
  lunchers about rescheduling
• Lunch Tomorrow (Meet _at_ 1225 on Bricks Barker,
  Desai, Koslow Parkins Uhlman Wales Wytrykusz

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Friday 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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Friday 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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LAST TIME Phosphorus 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

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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? Whose
  interests can Thomas ignore?
• PHOSPHORI?

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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 (Zinc) 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 Negotiation (Bribes)

13
Phosphorus 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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Phosphorus 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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Phosphorus 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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ZINC DQ31

• Why does the author believe that new property
  rights tend to arise from the emergence of new
  or different beneficial and harmful effects?
  (p.26)

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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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Demsetz 1st Thesis Shaw

• 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 Calcium 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