Problemset 1

Essay by anttimUniversity, Bachelor's November 2014

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Name: Antti Erholm

Red ID: 816357510 10/2/2012

Law & Economics Problem set 1

Case 1

False. It would not be equitable and efficient to ban window blinds. If Spring Window Fashion LLC would have to ban window blinds it would lead to great financial loses to the company. One window blinds costs $24-40 and they have about 140 000 units, so losses for the company would be in that scenario about $3.360.000-5.600.000. You can always argue that if something happens to the customer who has bought the window blinds would lead some legal expenses to the company. However any incidents or injuries because of window blinds have not been reported. Even if you are poor and less-educated you can have the opportunity to find out about the dangers of the product. Spring Window Fashion LLC can make some kind of sign in the store to warn customers about the possible dangers of the product.

It would create costs to the company because some customers would not buy the product but costs would be small compared to total banning.

Case 2

True. Ruling of Judge Nelson in benefit of the plaintiff leads to efficient allocation of resources. Hunter of the whale has ownership, even if somebody would found killed whale before the actual hunter. Rule of Tied Ownership gives incentives to hunters of wales to engage in productive hunt and gives no incentive for over-hunting. If Judge would have given property rights by rule of first possession it would have led to open access of resources. Then because of open access resources there would be efficiently loss due to overuse of resources.

Example of Open access resources:

Case 4

Uncertain. Giving property right to Walling gives incentive to open access resources which leads efficiently loss because of overuse of resources. However...