Torts - Cases, Principles, and Institutions Fifth Edition, 2016a

Witt & Tani, TCPI 9. Liability without Fault?
Source: Google Satellite image of 13949 Dacosta Street, Detroit, Michigan 48223.
Imagine that the new homeowners ringing the defendant at 13949 Dacosta did in fact
suffer greatly from the noise and smell and side effects of the kennel. Imagine further that they
would in the aggregate have been willing to pay the defendant property owner an amount that she
would have found sufficient to induce her to part with the right to operate a kennel on the
property. There is nonetheless good reason to think that this transaction will not happen even
where all the parties would be, by hypothesis and by their own lights, made better off by it. The
difficulty is that no one of the new homeowners can capture the benefits of purchasing the
property owner’s right to operate a kennel or other noxious business. Those benefits will be
shared with all the new homeowners in the ring. But each one of those homeowners would prefer
that one of their neighbors be the one to make the payment that will benefit them all. The result is
a classic collective action problem: absent some powerful mechanism for promoting cooperation
among the homeowners, it is very likely that the surrender of the 13949 Dacosta owner’s right to
certain noxious uses will not take place. See generally MANCUR OLSON, THE LOGIC OF
COLLECTIVE ACTION (1965).
Put in the terms adopted by Ronald Coase, which we first encountered in Chapter 2, the
collective action problem here is a kind of transaction cost that is obstructing the allocation in the
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