Entitlements as Auctions: Property Rules, Liability Rules, and Beyond

Abstract

This Essay concerns the different ways that policymakers can protect legal entitlements. The notion of a "legal entitlement" is an expansive one, encompassing such diverse rights as the right to bodily security, the right to a pollution-free atmosphere, the right to build a house that blocks another's view, or the right to damage another's reputation by false accusation. Twenty-five years ago Guido Calabresi and Douglas Melamed distinguished between property rules and liability rules as techniques for protecting entitlements. Property rules discouraged nonconsensual takings. Liability rules permitted nonconsensual takings in return for payment of damages.