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Resource Movement And The Legal System, Herbert J. Hovenkamp

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In "The Problem of Social Cost" Ronald Coase considered several common law disputes among neighbors whose economic activities conflicted with one another. For example, Sturges v. Bridgman was a nineteenth century nuisance case involving a pediatrician whose practice was hindered by his neighbor, a confectioner whose operation required a noisy mechanical mortar & pestle. Coase showed that if high transaction costs did not interfere, private bargaining would provide a solution which he characterized as efficient -- namely, that the right to continue would be given to the person who valued it most. For example, if the pediatrician valued the right …