Academic

Fennell on Aggregation & Division of Entitlements

By Lawrence Solum

Lee Anne Fennell (University of Chicago Law School) has posted Slices and Lumps on SSRN. Here is the abstract:

This brief essay, delivered in slightly different form as the 2008 Coase Lecture at the University of Chicago Law School, addresses problems involving the aggregation and division of entitlements. Fragments held by multiple parties - such as parcels of land, effort, or segments of a bridge - often must be assembled together to be worth much. Conversely, a presently unified entitlement may be more valuable if it can be split into separate pieces held by different parties. The essay examines these lumping and slicing problems (which turn out to be two sides of the same coin), shows how they turn up in both interpersonal and intrapersonal contexts, and discusses some tools for responding to them.

And some more from the paper, just to give you a flavor of the argument:

Both law and markets help to slice and lump. But you can't always get what you want, configuration-wise. Sometimes that's the efficient outcome. After all, it isn't only about what you want. These lumping and slicing operations always involve the interests of multiple parties (even if they are sometimes just different versions of yourself), and sometimes there is simply no gain to be had overall, once the interests of all relevant parties are taken into account. Maybe nobody wants the other half of your dog or the last three hours of your job each week, at least not at a price you'd find agreeable. On the other hand, we can't infer from the fact that a particular configuration doesn't exist that it wouldn't be efficient. Existing configurations can stick for good reasons (because they're the efficient configuration) or for bad reasons (because of transaction costs, including strategic behavior, that prevent value-enhancing reconfigurations).

To sharpen our thinking about this question, we can turn to a tool from economics, the production function. The production function traces the relationship between units of input and units of output. Consider, for example, the relationship between dollars contributed to a charity and the good that the charity does in the world. Perhaps the relationship is linear, at least within a particular range, so that each additional increment produces the same amount of value. Or perhaps a plateau may be reached after which additional dollars do less good than the dollars that went before. Conversely, there may be a ?snowball? effect so that as more contributions are added, each does more and more good. Or the curve may be in an Sshape, with a range of increasing effectiveness is followed by a range of diminishing returns. There are many possibilities.2 The productionfunction is a good, all-purpose mental tool for deciding how to stack together inputs. Should you study another hour for Property or switch over to Torts? How many people should you invite to your party? Well, you might want to consider what the production function is like for producing comprehension or revelry, respectively.

Another brilliant paper from Fennell.  Highly recommended.  Download it while its hot!

Full post as published by Legal Theory Blog on March 19, 2008 (boomark / email).