Question: Suppose that a railroad runs beside a field in which commercial crops are grown. The railroad is powered by a steam locomotive that spews hot

Suppose that a railroad runs beside a field in which commercial crops are grown. The railroad is powered by a steam locomotive that spews hot cinders out of its smokestack. From time to time those cinders land on the crops nearest to the track and burn them to the ground. Assume that each year, the farmer whose crops are burned loses $3000 in profits, and that the annual cost to the railroad of installing and maintaining a spark-arrester that would prevent any damage to the crops is $1750. Does it matter to the efficient use of the farmer’s land or to the efficient operation of the railroad whether the law protects the farmer from invasion by sparks or allows the railroad to emit sparks without liability? Why or why not?

Step by Step Solution

3.47 Rating (160 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

If transaction costs are zero then the initial distribution of property rights over land will ... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

153-L-B-L-P-C-L (378).docx

120 KBs Word File

Students Have Also Explored These Related Business Law Questions!