B could do all of these things to keep the problem in the box you’re trying to define, but if he does, it’s clear that friendly relations have already broken down between A and B, and by acting in this way, B is reducing the value of the land to A. Does A still want to live next door to a neighbour who is going to be so obnoxious about trifling property disputes?
I understand that you’re asking the question: how can prices be rationally decided in a bilateral monopoly? But the response that bilateral monopolies don’t happen can’t be brushed aside. Rational agents in this hypothetical situation will always be looking for alternatives, and the more is at stake the more creative they will get about it.
The actual solution to this in the real world, 99 times out of 100, is that B just says OK, or A insists on giving him $100 to cover the damages, or something generally amiable. The reason I asked this question is because I’m thinking about the efficiencies of injunctions (which result in bargaining) versus damage awards (which generally don’t). So the only characters I care about are the ones who aren’t neighborly.
Indeed, having confirmed my suspicions that this problem is insoluble, it favors a damage award in this context. B’s actions are almost pure holdup. If all he were entitled to were damages and not injunctive relief, he wouldn’t have nearly the same capacity for holdup, and the outcome looks more like the neighborly one (except with more bad will, perhaps).
In other words, I’m assuming that the agents are selfish and somewhat inhuman—irrational in a big picture sense—because occasionally these disputes do happen. There’s a MAJOR case where a landlord sued over having to install a 1 cubic foot cable-box that increased their property value, and there’s a case of a guy suing to stop someone from using an easement to get to a contiguous property (i.e. he had a right to cross A to get to B, but he was crossing A to get to B and then continuing on to C, and that was impermissible and went to court).
B could do all of these things to keep the problem in the box you’re trying to define, but if he does, it’s clear that friendly relations have already broken down between A and B, and by acting in this way, B is reducing the value of the land to A. Does A still want to live next door to a neighbour who is going to be so obnoxious about trifling property disputes?
I understand that you’re asking the question: how can prices be rationally decided in a bilateral monopoly? But the response that bilateral monopolies don’t happen can’t be brushed aside. Rational agents in this hypothetical situation will always be looking for alternatives, and the more is at stake the more creative they will get about it.
The actual solution to this in the real world, 99 times out of 100, is that B just says OK, or A insists on giving him $100 to cover the damages, or something generally amiable. The reason I asked this question is because I’m thinking about the efficiencies of injunctions (which result in bargaining) versus damage awards (which generally don’t). So the only characters I care about are the ones who aren’t neighborly.
Indeed, having confirmed my suspicions that this problem is insoluble, it favors a damage award in this context. B’s actions are almost pure holdup. If all he were entitled to were damages and not injunctive relief, he wouldn’t have nearly the same capacity for holdup, and the outcome looks more like the neighborly one (except with more bad will, perhaps).
In other words, I’m assuming that the agents are selfish and somewhat inhuman—irrational in a big picture sense—because occasionally these disputes do happen. There’s a MAJOR case where a landlord sued over having to install a 1 cubic foot cable-box that increased their property value, and there’s a case of a guy suing to stop someone from using an easement to get to a contiguous property (i.e. he had a right to cross A to get to B, but he was crossing A to get to B and then continuing on to C, and that was impermissible and went to court).