100 Iowa L. Rev. 2389 (2015)

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Abstract

In property law, and especially in the law of nuisance, the simple Calabresi–Melamed scheme of property and liability rules experience significant transformations, mainly through their recombination—which results in rules that are a combination of the elementary rules—and less frequently through the interplay between the rules and public regulatory standards. The result of these combination processes and the interaction between private law rules (property and liability) and public law standards is a set of complex rules in which some threshold acts as a switch that triggers a given property or liability rule to change into a different rule. In this respect, the negligence rule can be seen as a composite rule, consisting of a pure strict liability rule favoring the victim, and a property rule favoring the injurer, with the variable of due care acting as the switch between the two. Sometimes, the number of switches, and thus, the complexity of the rules, increase to two and, eventually, to a larger number.

The above explanation implies that property law, the area of the law that most conspicuously (albeit not exclusively) deals with the protection of entitlements is, in fact, much more structurally complex than most current law and economics analyses have assumed.

We also explore how the switches between elementary rules move along the variables typically involved in situations of conflict of entitlements: measures of care taken by parties in conflict, investments made by the parties, and uses of such investments. We identify how rules appear to be (using, with some conceptual abuse, the mathematical notion) monotonic in all those variables: The sequence of elementary rules and switches combined in complex rules does not allow “reversals of ordering” as choice variables increase or decrease. We conjecture that new developments and new forms of property would conform to the monotonicity property we identify and that informal coordination between the agents involved, instead of heavy reliance on formal legal enforcement, would play a large role in the choice of the structure of rules protecting entitlements through future property forms.