Reconfiguring property in three dimensions

University of Chicago Law Review

Volumn 75, Issue 3, 2008, Pages 1015-1070

  Bell, Abraham ^a,b   Parchomovsky, Gideon ^b,c  

^a FORDHAM UNIVERSITY   (United States)

^b BAR ILAN UNIVERSITY   (Israel)

^c UNIVERSITY OF PENNSYLVANIA   (United States)

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[No Author keywords available]

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EID: 56849112706     PISSN: 00419494     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (268)

1. William Blackstone, 2 Commentaries on the Laws of England *2 (Chicago 1979).
2. See Robert C. Ellickson, Property in Land, 102 Yale L J 1315, 1362-63 (1993) (enumerating the Blackstonian package of private entitlements).
3. See, for example, id (relating the evolution of standard land interests to the Blackstonian ideal).
4. See Carol M. Rose, Canons of Property Talk, or, Blackstone's Anxiety, 108 Yale L J 601, 612 (1998) (referring to the "exclusive dominion" view of property as "artificial");
5. Bruce A. Ackerman, Private Property and the Constitution 26 (Yale 1977) ("[First-year property students] learn that only the ignorant think it meaningful to talk about owning things free and clear of further obligation.").
6. See generally James E. Penner, The "Bundle of Rights" Picture of Property, 43 UCLA L Rev 711 (1996).
7. See also Ackerman, Private Property at 26 (cited in note 4) (explaining that property law "considers the way rights to use things may be parceled out amongst a host of competing resource users").
8. A.M. Honore famously produced a list of no less than eleven "leading incidents" of property ownership. A.M. Honore, Ownership, in A.G. Guest, ed, Oxford Essays in Jurisprudence 107, 113 (Oxford 1961).
9. See generally, for example, Thomas W. Merrill, Property and the Right to Exclude, 77 Neb L Rev 730 (1998) (arguing that while property owners enjoy a varied package of legal rights, the right to exclude is both necessary and sufficient for identifying the existence of property).
10. Without specific reference to Blackstone, Harold Demsetz's classic Toward a Theory of Property Rights posited that the law creates property rights over an object in order to allow a single owner to internalize the various externalities associated with that object.
11. See generally Harold Demsetz, Toward a Theory of Property Rights, 57 Am Econ Rev 347 (1967).
12. Demsetz's insight about the centrality of a single owner as a means for internalizing externalities was further developed by scholars such as Richard Epstein, Michael Heller, and Francesco Parisi. See Richard A. Epstein, Holdouts, Externalities, and the Single Owner: One More Salute to Ronald Coase, 36 J L & Econ 553, 562-63 (1993) (stating that concentrating all the incidents of ownership in a single person minimizes the transaction costs of reallocating property to its best use);
13. Michael A. Heller, The Tragedy of the Anti-commons: Property in Transition from Marx to Markets, 111 Harv L Rev 621, 631 (1998) (arguing that in regimes transitioning from socialism to private markets, the resources that emerge as private property most successfully are those that begin the transition with a near-standard bundle of rights assigned to a single person);
14. Francesco Parisi, Entropy in Property, 50 Am J Comp L 595, 613-17 (2002) (discussing legal mechanisms that promote reunification of fragmented property in a single owner).
15. See, for example, Frank H. Easterbrook, Intellectual Property Is Still Property, 13 Harv J L & Pub Policy 108, 118 (1990) (arguing that, except in the rarest case, the law should treat intellectual and tangible property identically).
16. But see Mark R. Patterson, When Is Property Intellectual? The Leveraging Problem, 73 S Cal L Rev 1133, 1138-39 (2000) (discussing special antitrust difficulties presented by intellectual property).
17. See Robert W. Gordon, Paradoxical Property, in John Brewer and Susan Staves, eds, Early Modern Conceptions of Property 95, 100 (Routledge 1995) (critically discussing the historic process of reification by which estates became independent assets subject to ownership).
18. Michael A. Heller, The Boundaries of Private Property, 108 Yale L J 1163, 1193 (1998) (identifying the bundle-of-legal-relations metaphor as a weak portrayal of the "thingness" of private property).
19. It is important to note that Blackstone himself acknowledged the complexity of property notwithstanding the idealized conception. In this sense, what is referred to as the Blackstonian conception of property is a misnomer. Consider Ellickson, 102 Yale L J at 1362-63 & n 237 (cited in note 2) (summarizing what has subsequently become known as the "Blackstonian Bundle of Rights" but immediately admitting that this characterization "is most uncharitable to Blackstone," who recognized many of the complexities and nuances of property law).
20. An important precursor to our Article is Shi-Ling Hsu, A Two-dimensional Framework for Analyzing Property Rights Regimes, 36 UC Davis L Rev 813 (2003), which examined two of the three dimensions: owner and dominion.
21. Takings may also be employed to force an owner of an interest in a large asset to divide the asset to permit the creation of single owners over each of the smaller assets. Such was the case in Hawaii Housing Authority v Midkiff, 467 US 229 (1984), where legislation forced owners to sell fee simple interests, through intermediaries, to their tenants in order to combat the problem of excessively concentrated land ownership in Hawaii.
22. See id at 232-34.
23. See Kenneth H. Young, 4 Anderson's American Law of Zoning § 25.03 at 284-89 (Clark Boardman Callaghan 4th ed 1997) (discussing the objectives of subdivision controls). Sometimes the restriction is imposed on metaphysical, rather than physical, alterations, as evidenced by the numerus clausus principle that prevents individuals from creating new property rights. A variant on this strategy, which we may label "forced presentism," curbs or eliminates the owner's power to interfere with future owners' dominion over an asset. Thus, the law prevents unreasonable restraints on alienation and discharges servitudes in light of changed circumstances. Some applications of the doctrine of waste also employ forced presentism. These rules preserve as close to full dominion as possible over time.
24. Other legal mechanisms employed to this end include trusts, some kinds of servitudes, and many kinds of zoning or environmental laws. We include trusts in this category even though we acknowledge that, in some respects, trusts also fall under the category of fictional owners, as well as having characteristics of fictional assets.
25. See Heller, 111 Harv L Rev at 679-87 (cited in note 8) (introducing and discussing "the tragedy of the anticommons," which results in the underuse of resources).
26. See Parisi, 50 Am J Comp L at 599-600, 626-27 (cited in note 8).
27. Hodel v Irving, 481 US 704, 707-08 (1987) (discussing the process by which "40-, 80-, and 160-acre parcels became splintered into multiple undivided interests in land, with some parcels having hundreds, and many parcels having dozens, of owners").
28. See Heller, 111 Harv L Rev at 685-87 (cited in note 8);
29. Parisi, 50 Am J Comp L at 599-600, 626-27 (cited in note 8).
30. See Part IV.A.
31. See, for example, Michael Heller and Rick Hills, Land Assembly Districts, 121 Harv L Rev 1465, 1467 (2008).
32. See Part IV.D.
33. See Abraham Bell, Private Takings 33-37 (unpublished manuscript, 2007) (discussing government-mediated private takings in which the government uses its eminent domain power to allow private actors to seize property).
34. See Richard R. Powell, 7 Powell on Real Property § 50.07[4]-[5] at 50-47 to 50-51 (Matthew Bender 2007) (Michael Allan Wolf, ed).
35. 345 NYS2d 828 (Sur Ct 1973).
36. See id at 829.
37. See id at 830 (failing to address the issue as one of partition but rather describing it as one of resolving ownership).
38. Harold Demsetz, Toward a Theory of Property Rights, 57 Am Econ Rev 347 (1967).
39. See id at 354.
40. Admittedly, one might conceive of another dimension of property specification: time. However, as our example demonstrates, durability of property rights is easily accommodated within the dimensions of asset and dominion.
41. See, for example, United States v Blackman, 613 SE2d 442, 444-45 (Va 2005) (concerning a servitude forcing the owner of a historical home to preserve its appearance).
42. Ellickson, 102 Yale L J at 1332-33 (cited in note 2).
43. See id at 1347-48.
44. Reification of rights, together with a post-Hohfeldian view of property rights as a "bundle of sticks," poses a challenge for those examining the three dimensions of property. Specifically, if property is merely a collection of owner rights-dominion, in our terminology-what does it mean to speak of a property "asset"? The answer is that even when the defined property asset is purely an abstraction, it is still conceived of as distinct from the dominion over it. For instance, if the property right consists of a right to profit from an idea, the idea is the asset; and the profit right, the dominion. Property rules always partake of distinct dimensions of dominion and asset because they are rights in rem. Thus, even if the protected res is merely abstract, it must be defined or conceived of in some fashion before one can proceed to defining the rights comprising owner dominion.
45. See Yoram Barzel, Economic Analysis of Property Rights 33 (Cambridge 2d ed 1997).
46. See id at 33-54 (using the tenant-farmer-landlord relationship as an example of how parties will maximize value by shifting contract form).
47. Barzel's concept of property rights differs significantly from that generally embraced by legal scholars and therefore requires some initial explanation. In contrast with the theories discussed in the previous Part, Barzel's theory views property as a post hoc description of the ability to enjoy value from a given service or asset. Notably, this description of property differs from a legal package of rights or even a legal recognition of the ability to enjoy value. See id at 3.
48. See also Thomas W. Merrill and Henry E. Smith, What Happened to Property in Law and Economics?, 111 Yale L J 357, 358 (2001):
49. [U]pon closer inspection, all this property-talk among legal economists is not about any distinctive type of right. To [] a greater extent than even the legal scholars, modern economists assume that property consists of an ad hoc collection of rights in resources. Indeed, there is a tendency among economists to use the term property "to describe virtually every device-public or private, common-law or regulatory, contractual or governmental, formal or informal-by which divergences between private and social costs or benefits are reduced." Quoting Richard A. Posner, Economic Analysis of Law 53 (Aspen 5th ed 1998).
50. The touchstone of Barzel's analysis is transaction cost economics as pioneered by Ronald Coase. In relevant part, this branch of economics treats legal entitlements as unimportant so long as transaction costs are sufficiently small. See R.H. Coase, The Problem of Social Cost, 3 J L & Econ 1, 1-15 (1960). Thus, Barzel had good reason to relegate questions of legal property to a secondary role in his investigation. Nonetheless, Barzel's discussion of property rights is valuable in delineating the interplay of the dimensions of property as understood by more traditional property scholarship.
51. See Barzel, Economic Analysis of Property Rights at 24 (cited in note 36) (explaining that by setting a price ceiling below the market-clearing price, a part of the rights to the gasoline was placed in the public domain and could be acquired by buyers who joined the queue).
52. Id at 27-29. Auxiliary services included pumping gas, washing windows, and checking engine oil.
53. See id at 78-80 (explaining how contractual arrangements between workers and employers vary in order to expose each of the parties to different levels of variability).
54. See id at 45-49 (discussing how lease contract attributes, such as maintenance responsibilities, are assigned to the party that can better affect the value of the output by manipulating that attribute).
55. See id at 60-62, 64 (noting that fire insurers are the "efficient owners" of a building's attribute of fire hazard since fire insurers, rather than titleholders, are specialists in minimizing fire hazard).
56. See id at 65-84.
57. See id at 33-54 ("Together owners of labor and owners of land ... will adopt the contract form that generates the largest net output value.").
58. See id at 55-64 (examining the complex structuring of rights associated with large-scale equipment and office buildings).
59. See id at 11 ("The presence of positive transaction costs is what makes the study of property rights significant.").
60. See id at 51-53.
61. See id at 81 (defining the scope of the firm as "the set of contracts whose variability is contractually guaranteed by common equity capital").
62. The description of corporations as a network of contracts was proposed by Michael Jensen and William Meckling. See Michael C. Jensen and William H. Meckling, Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure, 3 J Fin Econ 305, 310-11 (1976) (describing most organizations as legal fictions, "which serve as a nexus for a set of contracting relationships among individuals") (emphasis omitted).
63. Whereas Jensen and Meckling's theory is referred to as "nexus of contracts," Barzel refers to a firm as a "nexus of outcome guarantees." Barzel, Economic Analysis of Property Rights at 81 (cited in note 36).
64. See note 38.
65. See generally Douglas W. Allen, The Rhino's Horn: Incomplete Property Rights and the Optimal Value of an Asset, 31 J Legal Stud 339 (2002) (discussing optimizing asset value for owners by partial destruction of the asset).
66. See 17 USC § 106(4) (2000).
67. See, for example, Jay M. Fujitani, Comment, Controlling the Market Power of Performing Rights Societies: An Administrative Substitute for Antitrust Regulation, 72 Cal L Rev 103, 105 (1984) (describing how "[t]he ephemeral nature of public performances [that] made it difficult for copyright owners to detect unauthorized performances of their works" led to the creation of organizations for the enforcement of performance rights).
68. See W Jonathan Cardi, Uber-middleman: Reshaping the Broken Landscape of Music Copyright, 92 Iowa L Rev 835, 844 (2007) ("ASCAP... is famous for stories of its employees, cloaked in ASCAP-emblazoned jackets, patrolling local concerts, stores, restaurants, and nightclubs in search of... businesses that perform songs publicly without permission.").
69. See also Stanley M. Besen, Sheila N. Kirby, and Steven C. Salop, An Economic Analysis of Copyright Collectives, 78 Va L Rev 383, 385-90 (1992).
70. See Robert P. Merges, Contracting into Liability Rules: Intellectual Property Rights and Collective Rights Organizations, 84 Cal L Rev 1293, 1303 (1996).
71. An alternative owner-asset adjustment might involve copyright owners transferring the copyrights themselves to the collectives.
72. See Inducing Infringement of Copyrights Act of 2004, Hearings on S 2560 before the Senate Committee on the Judiciary, 108th Cong, 2d Sess (2004) (testimony of Mitch Bainwol, Chairman and CEO, Recording Industry Association of America), online at http://judiciary.senate.gov/testimony.cfm?id=1276&wit- id=3753 (visited June 8, 2008).
73. See Digital Millennium Copyright Act (DMCA), Pub L No 105-304, 112 Stat 2860 (1998), codified in relevant part at 17 USC §§ 1201-05 (2000).
74. For a discussion of the content industry's role in the enactment of the DMCA, see Jessica Litman, Digital Copyright 122-49 (Prometheus 2001).
75. See Pamela Samuelson and Suzanne Scotchmer, The Law and Economics of Reverse Engineering, 111 Yale L J 1575, 1640 (2002) (pointing out that "[m]ost users have neither the inclination nor the ability to circumvent a technical protection measure").
76. See also Jack Goldsmith and Tim Wu, Who Controls the Internet? 107-25 (Oxford 2006) (describing how the litigation that marked the demise of Kazaa also meant that file trading groups avoiding government detection would be harder to find by ordinary users).
77. See, for example, Peter K. Yu, Anticircumvention and Anti-anticircumvention, 84 Denver U L Rev 13, 23 (2006) (noting that there are "no perfect, hacker-proof technological protection measures);
78. Fred von Lohmann, Measuring the Digital Millennium Copyright Act against the Darknet: Implications for the Regulation of Technological Protection Measures, 24 Loyola LA Enter L Rev 635, 638 (2004) ("Proponents of the DMCA's anti-circumvention provisions were not naïve about the technological infallibility of [technical protection measures]. They admitted that no technology would be foolproof against every hacker bent on compromising it.").
79. See von Lohmann, 24 Loyola LA Enter L Rev at 639 (cited in note 62) (stating that the DMCA anticircumvention provisions have not been of any help to content owners).
80. But see Paul Ohm, The Myth of the Superuser: Fear, Risk, and Harm Online, 41 UC Davis L Rev 1327, 1398 (2008).
81. See Christopher Sprigman, The 99 Question, 5 J Telecommun & High Tech L 87, 90-91 (2006).
82. Indeed, track fillers, or filler songs, are often called "throwaways." Consider Glynn S. Lunney, Jr., Fair Use and Market Failure: Sony Revisited, 82 BU L Rev 975, 1028 n 193 (2002) (suggesting that "a full-length CD consists of four tracks that consumers want and another six to eight tracks of filler songs").
83. See, for example, Randal C. Picker, Mistrust-based Digital Rights Management, 5 J Telecommun & High Tech L 47, 67 (2006).
84. See Joseph Palenchar, NPD: Illegal Downloads Outpacing Legal Downloads, Twice (Mar 14, 2007), online at http://www.twice.com/article/ CA6424429.html (visited June 8, 2008).
85. Rent-seeking is prevalent in the production of legal property rules, as in any other political activity, and there is no reason to believe therefore that every property change will improve net welfare. Indeed, we discuss a number of badly designed property definitions in Part IV.
86. See Barzel, Economic Analysis of Property Rights at 98-104 (cited in note 36) (discussing the government's role in delineating property rights through dispute settlement and by placing assets which are very costly to police into the public domain);
87. Richard A. Epstein, The Allocation of the Commons: Parking on Public Roads, 31 J Legal Stud 515, 518 (2002) (asserting that where there is little risk of overuse of a common-pool asset, gains from more efficient allocation of the asset may be offset by increases in administrative costs).
88. See, for example, Ellickson, 102 Yale L J at 1368-71 (cited in note 2).
89. See generally Merrill and Smith, 111 Yale L J 357 (cited in note 38);
90. Thomas W. Merrill and Henry E. Smith, Optimal Standardization in the Law of Property: The Numerus Clausus Principle, 110 Yale L J 1 (2000);
91. Thomas W. Merrill and Henry E. Smith, The Property/Contract Interface, 101 Colum L Rev 773 (2001).
92. See Merrill and Smith, 110 Yale L J at 26-27 (cited in note 71) (justifying the numerus clausus principle as a means for controlling an "externality involving measurement costs: Parties who create new property rights will not take into account the full magnitude of the measurement costs they impose on strangers to the title").
93. See Merrill and Smith, 111 Yale L J at 394 (cited in note 38).
94. See Merrill and Smith, 110 Yale L J at 4 (cited in note 71).
95. See Abraham Bell and Gideon Parchomovsky, A Theory of Property, 90 Cornell L Rev 531, 533 (2005) ("Because it is practically impossible for contracts to arrange most of society's relationships, property law determines most of the legal interactions regarding assets among people.");
96. Merrill and Smith, 111 Yale L J at 393-94 (cited in note 38) (arguing that if property is a bundle of rights, some bundles are much easier to communicate than others and therefore have an information-cost advantage).
97. To be sure, there is no reason to be certain that lawmakers will act correctly in order to ensure optimal value preservation for future generations.
98. See generally Heller, 111 Harv L Rev 621 (cited in note 8);
99. Heller, 108 Yale L J 1163 (cited in note 11);
100. Michael A Heller, The Dynamic Analytics of Property Law, 2 Theoretical Inquiries in L 79 (2001) (proposing anticommons as a fourth ideal type of property, to be added to the standard trilogy of private, commons, and state property).
101. The concept was first introduced by Frank Michelman. See Frank I. Michelman, Ethics, Economics, and the Law of Property, in J. Roland Pennock and John W Chapman, eds, NOMOS XXIV: Ethics, Economics, and the Law 3, 6 (NYU 1982).
102. See Heller, 111 Harv L Rev at 633-42 (cited in note 8).
103. Heller, 108 Yale L J at 1179 (cited in note 11).
104. See id at 1177 (noting how judges reduced the costs of intertemporal fragmentation by restricting the fee tail).
105. See id at 1183-84 (explaining how fragmenting governance among a group of owners may promote good fragmentation), 1165-66 (noting that "[b]ecause of high transaction costs, strategic behaviors, and cognitive biases, people may find it easier to divide property than to recombine it").
106. See id at 1183-85 (predicting that without the restriction of members' veto rights, common-interest communities "may fall further and further behind their productivity frontier").
107. See Parisi, 50 Am J Comp L at 626-27 (cited in note 8).
108. See id at 627.
109. For other discussions of the fragmentation problem in property, see generally Lee Anne Fennell, Common Interest Tragedies, 98 Nw U L Rev 907 (2004);
110. Reza Dibadj, Regulatory Givings and the Anticommons, 64 Ohio St L J 1041 (2003);
111. Hsu, 36 UC Davis L Rev 813 (cited in note 13);
112. Dan Hunter, Cyberspace as Place and the Tragedy of the Digital Anticommons, 91 Cal L Rev 439, 509-13 (2003);
113. James M. Buchanan and Yong J. Yoon, Symmetric Tragedies: Commons and Anticommons, 43 J L & Econ 1 (2000).
114. It should be noted, though, that Parisi also analyzes the dominion-related aspects of fragmentation. See Parisi, 50 Am J Comp L at 609-10, 614-15 (cited in note 8).
115. See also Ben W.F. Depoorter and Francesco Parisi, Fragmentation of Property Rights: A Functional Interpretation of the Law of Servitudes, 3 Global Jurist Frontiers, Issue 1, Article 2, at 3 (2003), online at http://www.bepress.com/gj/frontiers/vol3/iss1/art2/ (visited June 8, 2008).
116. Carol M. Rose, The Comedy of the Commons: Custom, Commerce, and Inherently Public Property, 53 U Chi L Rev 711, 720 (1986).
117. Id.
118. Id.
119. See id at 722.
120. See id at 752 ("Without public prescription doctrine, each owner along the way might bar the passage at will and siphon off its public value.").
121. Id at 758.
122. Id.
123. Id at 767-68.
124. Compare Mark A. Lemley and Philip J. Weiser, Should Property or Liability Rules Govern Information?, 85 Tex L Rev 783, 812 (2007) (explaining how the failure of the FCCs unbundling program in the telecommunications industry can be attributed to a misunderstanding of "semicommons" property, where one firm has legal access to use the private property of another).
125. See Carl Shapiro, Exclusivity in Network Industries, 7 Geo Mason L Rev 673, 673 (1999).
126. See Garrett Hardin, The Tragedy of the Commons, 162 Science 1243, 1244 (1968).
127. See Epstein, 36 J L & Econ at 562-63 (cited in note 8).
128. Id at 556.
129. See id at 557 (maintaining that "the purpose of all legal rules is to minimize the sum of the costs that are associated with these two forms of bargaining obstacles").
130. See id at 561.
131. See id at 562 (basing this statement on "[a] rough empirical guess").
132. See id at 562-63.
133. Id at 562 (emphasis added).
134. 21 US 543 (1823).
135. See also Eric Kades, History and Interpretation of the Great Case of Johnson v. MTntosh, 19 L & Hist Rev 67, 69 (2001) (contending that the M'Intosh rule served as a cost-effective way for Europeans to expropriate Native American lands but that there was no real dispute in this case since the parties did not truly have conflicting claims to the land).
136. For other discussions of the doctrine of discovery, see generally Alex Tallchief Skibine, Chief Justice John Marshall and the Doctrine of Discovery: Friend or Foe to the Indians?, 42 Tulsa L Rev 125 (2006).
137. See, for example, Coffin v Left Hand Ditch Co, 6 Colo 443 (1882) (establishing the Colorado doctrine of first appropriation).
138. For further discussion, see David B. Schorr, Appropriation as Agrarianism: Distributive Justice in the Creation of Property Rights, 32 Ecology L Q 3 (2005) (contending that the Colorado rule was intentionally designed to prevent control of water by capitalists and embodies an antimonopolistic, agrarian ideal).
139. See, for example, Stratton v Mt. Hermon Boys' School, 103 NE 87, 88 (Mass 1913) (denying an absolute right of property in water and stating that "[t]he use of the water flowing in a stream is common to all riparian owners and each must exercise this common right so as not essentially to interfere with an equally beneficial enjoyment of the common right by his fellow riparian owners").
140. See W. Page Keeton, et al, Prosser and Keeton on Torts § 87 at 622-23 (West 5th ed 1984) (discussing the requirements for recovery on a private nuisance theory).
141. See, for example, Richard R. Powell, 6 The Law on Real Property § 64.02[l]-[3] at 64-10 to 64-13 (Matthew Bender 2007) (Michael Allan Wolf, ed) (explaining nuisance law as setting restrictions on owners' power to use land in certain ways).
142. See Henry E. Smith, Exclusion and Property Rules in the Law of Nuisance, 90 Va L Rev 965, 974-75 (2004) (asserting that information costs can explain how regimes of exclusion and governance define entitlements in nuisance law).
143. See Epstein, 36 J L & Econ at 557, 573 (cited in note 8).
144. Id at 575 (explaining that the law should not grant injunctive relief for every minor interference because of the massive holdout potential).
145. See, for example, Boomer v Atlantic Cement Co, Inc, 257 NE2d 870, 873 (NY 1970) (granting an injunction to be vacated upon payment of permanent damages by the cement factory to neighboring landowners).
146. See also Epstein, 36 J L & Econ at 576 (cited in note 8) (explaining that remedies are a function of the inverse relationship between externalities and holdouts and suggesting that a damage remedy is appropriate when the externality imposed on the plaintiff is much smaller than the holdout problem).
147. This goal lies at the very core of zoning. See Village of Euclid v Ambler Realty Co, 272 US 365, 390 (1926) (noting that the crux of recent zoning legislation was "the creation and maintenance of residential districts, from which business and trade of every sort, including hotels and apartment houses, are excluded").
148. See Coase, 3 J L & Econ at 16 (cited in note 38).
149. See US Const, Amend V.
150. Richard A. Posner, Foreword: A Political Court, 119 Harv L Rev 32, 93 (2005) (referring to eminent domain as an "almost random form of taxation" that enriches the government at the expense of the private landowner and is only justified in a very narrow set of circumstances).
151. See Part IV.D.
152. Compare generally Saul Levmore, Two Stories about the Evolution of Property Rights, 31 J Legal Stud 421 (2002) (advancing a theory that transaction costs and interest groups drove the movement of property from the commons to privatization and, in several instances, back again to a more open-access arrangement).
153. Ronald Coase paved the way for the "make or pay" analysis-whether corporations should produce components or services internally, or purchase on the market. See generally R.H. Coase, The Nature of the Firm, 4 Economica 386 (1937) (theorizing that firms arise in order to economize on transaction costs because the higher the cost of transacting externally on the market, the greater the comparative advantage of producing a firm's needs internally).
154. Since Coase's pathbreaking article, an extensive literature has developed. See generally, for example, Armen A. Alchian and Harold Demsetz, Production, Information Costs, and Economic Organizations, 62 Am Econ Rev 777 (1972) (exploring the team productive process and why it induces the contractual formation of the firm);
155. Benjamin Klein, Robert G. Crawford, and Armen A. Alchian, Vertical Integration, Appropriable Rents, and the Competitive Contracting Process, 21 J L & Econ 297 (1978) (describing how the potential postcontractual extraction of high rents induces parties to integrate vertically rather than contract);
156. Oliver E. Williamson, Transaction-cost Economics: The Governance of Contractual Relations, 22 J L & Econ 233 (1979) (using the three dimensions of frequency, investment idiosyncrasy, and uncertainty to characterize transaction costs and match them with appropriate governance structures);
157. Oliver E. Williamson, The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting (Free Press 1985) (describing the analytical framework of transaction cost economics and applying it to different contractual settings);
158. Oliver Hart, An Economist's Perspective on the Theory of the Firm, 89 Colum L Rev 1757 (1989) (finding the transaction cost economics model of the firm unconvincing and advancing a property-rights approach in which firms are characterized by their nonhuman assets);
159. Bengt Holmström and John Roberts, The Boundaries of the Firm Revisited, 12 J Econ Perspectives 73 (1998) (arguing for a broader view of the firm than has been provided by either transaction cost economics or property rights theory).
160. See, for example, the discussion of tenancies by the entirety in Sawada v Endo, 561 P2d 1291, 1295 (Hawaii 1977) (holding that the tenancy by the entirety is predicated upon the legal unity of husband and wife in single ownership and cannot be conveyed or reached by execution through either spouse alone).
161. See Robert W Hillman, Allan W. Vestal, and Donald J. Weidner, The Revised Uniform Partnership Act § 201(a) at 79 (West 2006) ("A partnership is an entity distinct from its partners.").
162. See Henry Hansmann and Ugo Mattei, The Functions of Trust Law: A Comparative Legal and Economic Analysis, 73 NYU L Rev 434, 472 (1998).
163. See generally, for example, Joint Properties Owners, lne v Deri, 113 AD2d 691 (NY App Div 1986) (noting that the leasehold interest does not terminate upon the lessee's death but passes as personal property to the decedent's estate).
164. For further discussion, see generally Nina A. Mendelson, A Control-based Approach to Shareholder Liability for Corporate Torts, 102 Colum L Rev 1203 (2002) (proposing to hold controlling shareholders liable for corporate torts and statutory violations based on their level of involvement).
165. See generally Coase, 4 Economica 386 (cited in note 120); Williamson, 22 J L & Econ 233 (cited in note 120);
166. Eugene F. Fama and Michael C. Jensen, Separation of Ownership and Control, 26 J L & Econ 301 (1983) (arguing that the separation of decisionmaking and risk-bearing functions survives in large corporations because it can control agency problems and effectively use specific knowledge in decisionmaking).
167. See Zohar Goshen, Controlling Strategic Voting: Property Rule or Liability Rule?, 70 S Cal L Rev 741, 743 (1997) ("Although an investor's decision to join an investors' group is made on an individual basis... from that moment onward... most decisions must be made collectively").
168. See Henry Hansmann and Reinier Kraakman, Organizational Law as Asset Partitioning, 44 Eur Econ Rev 807-17 (2000) (discussing the importance of organizational law in permitting a better match of asset packages for different tastes and desires for risk).
169. For a fascinating exploration of situations in which an owner will find it cost effective to destroy asset value to maximize owner utility, see generally Allen, 31 J Legal Stud 339 (cited in note 53).
170. See, for example, Douglas Litowitz, Reification in Law and Legal Theory, 9 S Cal Interdiscipl L J 401, 401 (2000) ("As applied to law, reification represents a kind of infection... because it is essentially an error, a delusion, and a mystification that blinds people to alternative legal arrangements by 'naturalizing' the existing legal system as inevitable.").
171. See Dan L. Burk, Transborder Intellectual Property Issues on the Electronic Frontier, 6 Stan L & Policy Rev 9, 9-10 (1994) (explaining that "[u]nlike physical goods, intellectual goods lack the barriers that would allow their investors to prevent their free appropriation by consumers").
172. See, for example, Oren Bar-Gill and Gideon Parchomovsky, A Marketplace for Ideas?, 84 Tex L Rev 395, 429-30 (2005) (discussing the difficulties involved in defining the boundaries of ideas and inventions).
173. See Burk, 6 Stan L & Policy Rev at 9 (cited in note 131).
174. See, for example, Jonathan M. Barnett, Cultivating the Genetic Commons: Imperfect Patent Protection and the Network Model of Innovation, 37 San Diego L Rev 987, 991 (2000).
175. Jesse Dukeminier, et al, Property 175-82 (Aspen 6th ed 2006) (discussing the evolution of the estates system, which arose out of feudalism and defined estates according to their length of endurance).
176. Id at 182 ("The development of the fee simple estate is an example of that most striking phenomenon of English land law, the reification of abstractions, a process of thinking that still pervades our law."). While the estate system originally applied only to land, it was subsequently extended to other tangible and intangible assets.
177. Id at 181-82, 186-90, 225-28.
178. 496 NE2d 869 (NY 1986).
179. See id at 871.
180. The father's desire to avoid testamentary disposition was apparently influenced by his desire to lower estate tax exposure. See id.
181. A trust would have created a fiduciary duty in the father toward his son regarding the painting; this would be somewhat more exacting than the duty not to commit waste that was created by the actual transfer of the future interest.
182. The fee tail was originally codified in the Statute de Donis Conditionalibus, 13 Edw I, stat I (1285).
183. In England, the successive life estates interpretation of the estate competed with several other conceptions, such as viewing only the first generation or the first three generations as equivalent to life estates See John F. Hart, "A Less Proportion of Idle Proprietors": Madison, Property Rights, and the Abolition of Fee Tail, 58 Wash & Lee L Rev 167, 172 (2001).
184. The fee tail could also be useful as a tax-saving device by avoiding estate taxes. See Dukeminier, et al, Property at 187 (cited in note 135) (noting that the fee tail, though passing from generation to generation, did not expire until the original tenant in fee tail and all of that tenant's descendants were dead).
185. See id at 187-88 (describing common recovery as an expensive legal procedure used to restore alienability of the land). See also Jesse Dukeminier and James E. Krier, The Rise of the Perpetual Trust, 50 UCLA L Rev 1303, 1320 (2003) ("Later, the common recovery was abolished, and a tenant in tail was permitted to convey a fee simple by a deed.").
186. See Dukeminier, et al, Property at 188 (cited in note 135).
187. For a discussion of the role of eminent domain in countering strategic behavior, see Posner, 119 Harv L Rev at 93-94 (cited in note 117).
188. 467 US 229 (1984) (upholding the constitutionality of the Land Reform Act of 1967, Haw Rev Stat § 516, which authorized the Hawaii Housing Authority to use eminent domain as a tool to achieve market dilution).
189. See id at 233 ("[T]he Hawaii Legislature enacted the Land Reform Act of 1967... which created a mechanism for condemning residential tracts and for transferring ownership of the condemned fees simple to existing lessees.").
190. See generally Penn Central Transportation Co v City of New York, 438 US 104 (1978).
191. see generally John Nivala, The Future for Our Past: Preserving Landmark Preservation, 5 NYU Envir L J 83, 113 (1996) (noting that the only compensation the landowner receives for bearing the cost of preserving tomorrow's heritage is "the advantage of living and doing business in a civilized community").
192. See, for example, William A. Fischel, Lead Us Not into Penn Station: Takings, Historic Preservation, and Rent Control, 6 Fordham Envir L J 749, 753 (1995) (stating that even an isolated landmark is "a building that provides something that almost all of us would characterize as a public benefit").
193. For a discussion of preservation laws, see generally Carol M. Rose, Preservation and Community: New Directions in the Law of Historic Preservation, 33 Stan L Rev 473 (1981) (outlining the evolving rationale for modern preservation laws and showing how preservation law has also become a vehicle for community organization and politics).
194. See Kenneth H. Young, 2 Anderson's American Law of Zoning § 11:01 at 437 (Clark Boardman Callaghan 4th ed 19%) ("The common zoning regulation requires that the dwellings in a specific district be constructed on a lot of a minimum size, with minimum frontage and setback.").
195. See generally William A. Fischel, The Economics of Zoning Laws: A Property Rights Approach to American Land Use Controls (Johns Hopkins 1985).
196. See generally Henry Hansmann and Marina Santilli, Authors' and Artists' Moral Rights: A Comparative Legal and Economic Analysis, 26 J Legal Stud 95 (1997) (arguing that the moral rights doctrine serves to provide economic benefits not just to the individual artist but also to owners of the artist's work and the public at large).
197. The classic formulation of the rule is John Chipman Gray's: "No interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest." John C. Gray, The Rule against Perpetuities § 201 at 191 (Little, Brown 4th ed 1942).
198. The Rule in Shelley's Case states "that if (1) one instrument (2) creates a life estate in land in A, and (3) purports to create a remainder in persons described as A's heirs (or the heirs of A's body), and (4) the life estate and remainder are both legal or both equitable, the remainder becomes a remainder in fee simple (or fee tail) in A." Dukeminier, et al, Property at 243 (cited in note 135).
199. Other rules include the rule of the destructibility of contingent remainders and the doctrine of worthier title. See id at 241-44.
200. See notes 142-46 and accompanying text.
201. See Merrill and Smith, 110 Yale L J at 8 (cited in note 71) ("The existence of unusual property rights increases the cost of processing information about all property rights.... Standardization of property rights reduces these measurement costs.").
202. See id at 40 (describing how numerus clausus, though strongly restrictive, is also permissive and therefore tends toward the optimal level of standardization).
203. See generally Ian M. Dobbs and Martyn B. Hill, Pricing Solutions to the Bilateral Monopoly Problem under Uncertainty, 60 S Econ J 479 (1993) (deriving a nonuniform price solution to the bilateral monopoly problem in response to the suboptimal performance of uniform pricing).
204. See generally Todd D. Mayo, A Holistic Examination of the Law of Conservation Easements, in Julie A. Gustanski and Roderick H. Squires, eds, Protecting the Land: Conservation Easements Past, Present, and Future 26 (Island 2000) (presenting a comparative analysis of the basic elements of conservation easements among different states).
205. See id at 27 (noting that the definition of a conservation easement varies across states and is defined by states who have adopted the Uniform Conservation Easement Act as a "non-possessory interest... in real property").
206. See Dukeminier, et al, Property at 667-71 (cited in note 135). 166 Id at 740-44.
207. See generally, for example, Sanborn v McLean, 206 NW 496 (Mich 1925) (enjoining the building of a gas station on land subject to a longstanding reciprocal negative easement prohibiting non-residential buildings).
208. See generally, for example, Boomer v Atlantic Cement Co, Inc, 257 NE2d 870, 873 (NY 1970).
209. Air Pollution Prevention and Control Act ("Clean Air Act"), Pub L No 91-604, 84 Stat 1676 (1970), codified as amended at 42 USC § 7401 et seq (2000).
210. Federal Water Pollution Prevention and Control Act ("Clean Water Act"), Pub L No 92-500, 86 Stat 816 (1972), codified as amended at 33 USC § 1251 et seq (2000 & Supp 2004).
211. Endangered Species Act of 1973, Pub L No 93-205, 87 Stat 884, codified as amended at 16 USC § 1531 et seq (2000).
212. See generally Jedediah Purdy, The American Transformation of Waste Doctrine: A Pluralist Interpretation, 91 Cornell L Rev 653, 658 (2006).
213. See the discussion in Smith, 90 Va L Rev at 1030-32 (cited in note 110).
214. 3 Cai R 175 (NY Sup Ct 1805).
215. See id at 175.
216. See the discussion in Dean Lueck, The Rule of First Possession and the Design of the Law, 38 J L & Econ 393, 422-30 (1995): First possession rules are the dominant method of initially establishing property rights Such rules grant a legitimate ownership claim to the party that gains control before other potential claimants. They have been applied widely in both common and statute law, in such varied settings as abandoned property, adverse possession, bona fide purchasing, the electromagnetic spectrum, emissions rights, fisheries and wildlife, groundwater, hardrock minerals, intellectual property, oil and gas, land, nonbankruptcy debt collection, satellite orbits, spoils of war, treasure trove, and water rights.
217. One infamous application of this rule can be found in M'Intosh, 21 US at 595-96, 604-05, which ruled that Native Americans did not have true ownership of lands in the Americas and that the European nations could therefore establish ownership through "discovery."
218. See, for example, Eads v Brazelton, 22 Ark 499, 499 (1861) (ruling that ownership over an abandoned shipwreck could be established by "occupation"-that is, actual salvage operations and not mere discovery of the wreck's location-and that failure to reduce the wreck to possession defeated a claim of ownership).
219. See T.E. Lauer, The Common Law Background of the Riparian Doctrine, 28 Mo L Rev 60, 101-02 (1963) (discussing the English case of Wright v Howard, 57 Eng Rep 76 (Ch 1823), which introduced the "natural flow" theory, affirming the principle that each proprietor has equal rights to water usage and therefore no proprietor can use her right to the prejudice of any other).
220. See Evans v Merriweather, 4 Ill 492, 494 (1842) ("There may be, and there must be, of that which is common to all, a reasonable use. The true test of the principle and extent of the use is, whether it is to the injury of the other proprietors or not.").
221. See, for example, Coffin v Left Hand Ditch Co, 6 Colo 443, 446 (1882).
222. A nonbeneficial use, for example, grants no appropriative rights; it is the style of appropriation rather than the actual capture that grants the rights. Thus, someone might draw from unclaimed waters but be forbidden to exercise property rights over them because they fall within the scope of the privileged appropriation.
223. See generally Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action (Cambridge 1990) (criticizing assumptions underlying proposed solutions to the tragedy of the commons and exploring an alternative solution in which users self-organize and govern themselves in the long-term management of the common resources).
224. See generally Howard R. Williams, Conservation of Oil and Gas, 65 Harv L Rev 1155 (1952) (discussing regulatory efforts in the oil and gas industry to prevent waste and improve recovery through prorationing, well-spacing, or compulsory pooling and unitization).
225. See Part ILA.
226. See General Allotment Act, ch 119, 24 Stat 388 (1887),
227. codified in various sections of title 25, repealed by the Indian Land Consolidation Act Amendments of 2000 § 106(a), Pub L No 106-462, 114 Stat 2007, codified in various sections of title 25.
228. See also Act of March 2, 1889, ch 405, 25 Stat 888 (authorizing the division of the Great Reservation of the Sioux Nation into separate reservations and the allotment of specific tracts of reservation land to individual Indians, conditioned on the consent of three-fourths of the adult male Sioux).
229. Hodel v Irving, 481 US 704, 708 (1987) (quoting legislative history on the Indian Reorganization Act of 1934).
230. 481 US 704 (1987).
231. See id at 716-18.
232. See also Babbitt v Youpee, 519 US 234, 244 (1997) (ruling that Congress's effort to rehabilitate the Act by allowing a narrow class of individuals to receive fractional interests did not cure the fatal flaw ruled unconstitutional in Irving).
233. See Heller, 108 Yale L J at 1217 (cited in note 11) (attacking the Hodel and Babbitt decisions rejecting private antifragmentation strategies as further perpetuating the tragedy of the anticommons).
234. See Abraham Bell and Gideon Parchomovsky, Of Property and Anti-property, 102 Mich L Rev 1, 2 (2003) ("Government actors often mismanage conservation properties, collaborating with private developers to dispose of government property at submarket prices and encouraging inefficient development on conservation property.").
235. See Hardin, 162 Science at 1244 (cited in note 96).
236. Bell and Parchomovsky, 102 Mich L Rev at 2 (cited in note 191).
237. To give one example, the federal Bureau of Land Management came under fire in a recent congressional report for its sale of seventy acres of Nevada land to a private developer for $763,000; the developer sold the land the next day for $4.6 million. See Joel Brinkley, A U.S. Agency Is Accused of Collusion in Land Deals, NY Times A16 (Oct 12, 2002).
238. Bell and Parchomovsky, 102 Mich L Rev at 17 (cited in note 191).
239. For examples, see id at 30-31 (listing four recent sales of undeveloped public lands in which conservation interests were systematically disadvantaged by the political decisionmaking process).
240. See id at 31-37 (proposing an "antiproperty easement" that vests in each property owner the right to veto any development in nearby green space).
241. Previously we have labeled those rights "antiproperty rights." See id at 5.
242. See Rose, 53 U Chi L Rev at 713 (cited in note 86).
243. Some states, most notably California, have extended the rights of the public "from the tidelands to the dry sand areas landward of the high-tide mark." Id at 713-14.
244. See generally, for example, Matthews v Bay Head Improvement Association, 471 A2d 355 (NJ 1984) (finding that the public must be given both access to and use of the foreshore as well as privately owned dry sand areas "as reasonably necessary").
245. See generally, for example, Gion v City of Santa Cruz, 465 P2d 50 (Cal 1970) (superseded by statute) (holding that an implied dedication of property rights to the public arose when the public has used the land for more than five years without permission or objection from previous owners);
246. Seaway Co v Attorney General of Texas, 375 SW2d 923 (Tex Civ App 1964) (affirming the jury's finding of an implied dedication of land to public use and of an easement by prescription over land that had been continuously and adversely used for over ten years).
247. See generally, for example, Thornton v Hay, 462 P2d 671 (Or 1969) (ruling that the public's use of the dry sand areas of the beach met all the elements of the custom doctrine: ancient, exercised without interruption, peaceable, reasonable, certain, obligatory, and not repugnant or inconsistent with any other law or custom);
248. City of Daytona Beach v Tona-Rama, Inc, 294 S2d 73 (Fla 1974) (subscribing to the customary rights doctrine but declining to find an easement by prescription because the public's use of the property was in furtherance of, not against, the interests of the private landowner);
249. County of Hawaii v Sotomura, 517 P2d 57 (Hawaii 1973) (recognizing that the public's long-standing use of the beach had ripened to a customary right).
250. See, for example, Posner, 119 Harv L Rev at 94
251. (cited in note 117) (discussing the need to assemble a large tract of land for the city's redevelopment plan as a possible impetus for the exercise of eminent domain in Kelo v City of New London, 545 US 469 (2005)).
252. See, for example, Preseault v United States, 100 F3d 1525, 1532 (Fed Cir 1996).
253. Consider Ink v City of Canton, 212 NE2d 574, 579 (Ohio 1965).
254. Indeed, in Preseault, the government advanced the argument that "the general federal legislation providing for the Government's control over interstate railroad operations as enacted and amended over the years had the effect of redefining the private property rights of these owners, leaving them without a compensable interest in the land." 100 F3d at 1533.
255. See Hill v Western Vermont Railroad Co, 32 Vt 68, 76 (1859): In either mode of appropriating land for the purposes of the company,... there is this implied limitation upon the power [of eminent domain], that the company will take only so much land or estate therein as is necessary for their public purposes. It does not seem to us to make much difference in regard to either the quantity or the estate, whether the price is fixed by the commissioners or by the parties.
256. James R. Neal, Compulsory Pooling Promotes Conservation of Michigan's Oil and Gas Natural Resources, 78 Mich Bar J 158, 161 (1999) (defending Michigan's compulsory pooling procedure as promoting a reasonable balance between conservation and development interests).
257. See Amnon Lehavi and Amir N. Licht, Eminent Domain, Inc., 107 Colum L Rev 1704 1732 (2007).
258. Pub L No 96-510, 94 Stat 2767 (1980), codified as amended at 42 USC § 9601 et seq (2000) (creating a tax on the chemical and petroleum industries and providing broad federal authority to respond to the release or threatened release of hazardous waste).
259. Subject to a handful of exceptions, CERCLA defines a brownfield as "real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant." 42 USC § 9601(39)(A).
260. For general information about Superfund, see EPA, CERCLA Overview (July 17, 2007), online at http://www.epa.gov/superfund/policy/cercla.htm (visited June 8, 2008).
261. See for example, Fenton D. Strickland, Note, Brownfield Remediated? How the Bona Fide Prospective Purchaser Exemption from CERCLA Liability and the Windfall Lien Inhibit Brownfield Redevelopment, 38 Ind L Rev 789, 789 (2005) (noting that many brownfields lay deserted and undeveloped because developers fear the risk of liability for cleanup costs under CERCLA).
262. See generally Anna Alberini, et al, The Role of Liability, Regulation, and Economic Incentives in Brownfield Remediation and Development: Evidence from Survey of Developers, 35 Regional Sei and Urban Econ 327 (2005).
263. See generally Howard F. Chang and Hilary Sigman, The Effect of Joint and Several Liability under Superfund on Brownfields, 27 Intl Rev L & Econ 363 (2007) (using a model of joint and several liability to show how liability risks from Superfund discourage the purchase of brownfields and emphasizing the effects arising from the potential buildup of defendants).
264. See generally id. See also Robert V. Percival, et al, Environmental Regulation: Law, Science, and Policy 269 (Aspen 4th ed 2003) (describing the EPA's announcement in 1995 to promote the use of "comfort letters" for owners worried about continued CERCLA liability and, similarly, "prospective purchaser agreements" to assure potential buyers worried about future CERCLA liability);
265. Zygmunt J.B. Plater, et al, Environmental Law and Policy: Nature, Law, and Society 1018 (Aspen 3d ed 2004).
266. See, for example, Maureen Ryan, Cyberspace as Public Space: A Public Trust Paradigm for Copyright in a Digital World, 79 Or L Rev 647, 647-648 (2000) (noting the expansion of copyright holders' rights at the expense of the public and seeking to arrest this trend by implementing principles of public trust to information).
267. For proposals of this kind, see, for example, Gideon Parchomovsky and Kevin Goldman, Fair Use Harbors, 93 Va L Rev 1483, 1488 (2007) (proposing to expand fair use by formalizing fair use harbors that would supplement the current equitable analysis).
268. Pub L No 94-553, 90 Stat 2541, codified as amended at 17 USC § 101 et seq (2000).