Boats and Docks

Property rule protection for the dock owner. What this means is that if the boat owner attempts to dock, the sheriff will throw her off.

$900

Since the dock is protected under the general rule, the position before bargaining is dock owner at 0 and boat owner at -900. By working together, they can both save $200.

The dock owner would rather make $200 than $0.

The boat owner would rather lose $700 than lose $900.

$100

Since the dock is protected under the general rule, the position before bargaining is dock owner at 0 and boat owner at -100. The boat owner would be willing to spend up to $100. The dock owner will not accept anything less than $500. There is no opportunity to contract.

The dock owner would rather make no money than lose $500.

Either way, the boat owner will not dock and will lose $100.

Neccesity Rule: Two Sided Liability (Qualified privelege)What this means is that the dock owner is liable for the boat's damage if he disallows the boat to dock, and the boat owner is liable for the dock's damage if she docks.

$900

The two sided liability rule holds each person accountable for the damage their actions cause: If the boat owner stays at the dock, she is liable for the $500 in damage that she does to the dock. If the dock owner denies dockage to the boat owner, he is liable for the $900 in boat damage that results. Is there opportunity to contract? The boat owner would not be willing to pay more than $500, since that is what she will have to pay if she docks against the dock owner's will. The dock owner will not accept any money under $500, since this is the amount he is due if the boat owner docks there. There is no opportunity to contract

The dock owner would rather pay nothing than have to pay $900.

The boat owner would rather pay $500 than $900.

$100

The two sided liability rule holds each person accountable for the damage their actions cause: If the boat owner stays at the dock, she is liable for the $500 in damage that she does to the dock. If the dock owner denies dockage to the boat owner, he is liable for the $100 in boat damage that results. Is there opportunity to contract? The most that the boat owner would be willing to pay is $100; the least the dock owner would be willing to accept is $500. There is no opportunity to contract.

The dock owner would rather make no money than lose $100.

The boat owner would rather lose $100 than lose$500.

Property Rule Protection for the boat owner.What this means is that the sheriff will not allow the dock owner to kick the boat off the dock.

$900

The reverse general rule gives property rule protection to the boat owner. The dock owner cannot decide to keep the boat owner from docking. Is there opportunity to contract? The least the boat owner is willing to accept is $900, which is the cost of the boat. The most the dock owner is willing to pay is $500, which is what he pays if she docks. There is no opportunity to contract.

The dock owner has no choice under the rule.

The boat owner would rather pay nothing than pay $900.

$100

The reverse general rule gives property rule protection to the boat owner. The dock owner cannot keep the boat owner from docking. Is there opportunity to contract? The most the dock owner is willing to pay to get the boat to leave is $500. The least the boat owner is willing to accept to leave is $100. Therefore, there is opportunity to contract. Splitting the gains to trade, the dock owner can pay the boat owner $300 to leave. This will leave the boat owner with a net profit of $200.

The dock owner would rather pay $300 than pay $500.

The boat owner would rather gain $200 than lose $100.

Neccesity Rule: Two Sided Liability (Qualified privelege)What this means is that the dock owner is liable for the boat's damage if he disallows the boat to dock, and the boat owner is liable for the dock's damage if she docks.

$900

The dock owner does not know which game he is playing

$100

The dock owner does not know which game he is playing

The two sided liability rule holds each person accountable for the damage their actions cause: If the boat owner stays at the dock, she is liable for the $500 in damage that she does to the dock. If the dock owner denies dockage to the boat owner, he is liable for either the $100 or the $900 in boat damage that results. Is there opportunity to contract? Since there is imperfect information, there is no opportunity to contract (?)There is no opportunity to contractPlus, high contracting costs prevent contracts.

The boat owner would rather pay nothing than something (whether or not that something be $100 or $900).

The boat owner knows that the dock owner will allow her to dock. Therefore, if her boat is cheap, she will not dock because she would rather pay $100 than $500; and if her boat is expensive she will dock because she would rather pay $500 than $900.

Unqualified PrivelegeThe dock owner is liable for any damage done to the boat, but the boat owner is not liable for any damage done to the dock.

$900

The dock owner does not know which game he is playing

$100

The dock owner does not know which game he is playing

The one sided liability rule holds the dock owner responsible for the damage done to the boat, but does not hold the boat owner responsible for the dock. Is there opportunity to contract? No. High contracting costs disallow contracting.

Either way, the boat owner risks losing $400.

Since docking incurs no costs on the boat owner, and not docking always incurs costs on the boat owner, the boat owner will always dock.

Unqualified privelege. The dock owner is liable for any damage done to the boat, but the boat owner is not liable for any damage done to the dock.

$900

The one sided liability rule holds the dock owner liable for keeping the boat off the dock, but does not hold the boat owner liable for damage done to the dock. Is there opportunity to contract? The least that the dock owner would accept would be $500. The most the boat owner would pay would be nothing. There is no opportunity to contractBesides, contracting costs are too high.

The dock owner would rather pay $500 than have to pay $900.

The boat owner would rather pay nothing than $900.

$100

The one sided liability rule holds the dock owner liable for keeping the boat off the dock, but does not hold the boat owner liable for damage done to the dock. Is there opportunity to contract? The least that the dock owner would accept would be $500. The most the boat owner would pay would be nothing.There is no opportunity to contractBesides, contracting costs are too high.

The dock owner would rather make no money than lose $100.

The boat owner would rather lose nothing than lose $100.

Property rule protection for the dock owner. What this means is that if the boat owner attempts to dock, the sheriff will throw her off.

$900

Since the dock is protected under the general rule, the position before bargaining is dock owner at 0 and boat owner at -900. Contracting costs deny this situation a contract

The dock owner has no choice.

The boat owner will lose the $900 either way.

$100

Since the dock is protected under the general rule, the position before bargaining is dock owner at 0 and boat owner at -100. The boat owner would be willing to spend up to $100. The dock owner will not accept anything less than $500. There is no opportunity to contract.

The dock owner would rather make no money than lose $500.

Either way, the boat owner will not dock and will lose $100.

Neccesity Rule: Two Sided Liability (Qualified privelege)What this means is that the dock owner is liable for the boat's damage if he disallows the boat to dock, and the boat owner is liable for the dock's damage if she docks.

$900

The two sided liability rule holds each person accountable for the damage their actions cause: If the boat owner stays at the dock, she is liable for the $500 in damage that she does to the dock. If the dock owner denies dockage to the boat owner, he is liable for the $900 in boat damage that results. Is there opportunity to contract? The boat owner would not be willing to pay more than $500, since that is what she will have to pay if she docks against the dock owner's will. The dock owner will not accept any money under $500, since this is the amount he is due if the boat owner docks there. There is no opportunity to contract

The dock owner would rather pay nothing than have to pay $900.

The boat owner would rather pay $500 than $900.

$100

The two sided liability rule holds each person accountable for the damage their actions cause: If the boat owner stays at the dock, she is liable for the $500 in damage that she does to the dock. If the dock owner denies dockage to the boat owner, he is liable for the $100 in boat damage that results. Is there opportunity to contract? The most that the boat owner would be willing to pay is $100; the least the dock owner would be willing to accept is $500. There is no opportunity to contract.

The dock owner would rather make no money than lose $100.

The boat owner would rather lose $100 than lose$500.

Property Rule Protection for the boat owner.What this means is that the sheriff will not allow the dock owner to kick the boat off the dock.

$900

The reverse general rule gives property rule protection to the boat owner. The dock owner cannot decide to keep the boat owner from docking. Is there opportunity to contract? The least the boat owner is willing to accept is $900, which is the cost of the boat. The most the dock owner is willing to pay is $500, which is what he pays if she docks. There is no opportunity to contract.

The dock owner has no choice under the rule.

The boat owner would rather pay nothing than pay $900.

$100

The reverse general rule gives property rule protection to the boat owner. The dock owner cannot keep the boat owner from docking. Is there opportunity to contract? The most the dock owner is willing to pay to get the boat to leave is $500. The least the boat owner is willing to accept to leave is $100. Therefore, there is opportunity to contract. Splitting the gains to trade, the dock owner can pay the boat owner $300 to leave. This will leave the boat owner with a net profit of $200. Contract is blocked by high contracting costs

The dock owner has no choice.

The boat owner would rather lose nothing than lose $100.