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Property Rights And Liability Rules: The Ex Ante View Of The Cathedral, Lucian Arye Bebchuk

Michigan Law Review

This Article aims to contribute to the study of how the law should allocate and protect entitlements in the presence of externalities. In their classic article published thirty years ago, Calabresi and Melamed studied such questions and offered what they labeled "one view of the Cathedral." I seek to add to the inquiry started by Calabresi and Melamed by offering an ex ante perspective and analyzing how allocations of entitlements affect parties' ex ante actions and investments. Suppose that an upstream Factory would benefit from an activity that would pollute a river and harm an activity conducted by a downstream …