Of Coast and Cattle: Dispute Resolution Among Neighbors in Shasta County

(Reading for week 4)
By Robert C. Ellickson

This research paper presents an empirical perspective of dispute resolution among neighbors in evaluating economist Ronald Coase’s hypothetical theorem “The problem of social cost”, in which Coase suggests that when transaction costs are zero, the rule of liability will have no effect on the allocation of assets.

The author examined how the rural landowner respond to the change of trespass law, why the law is not efficient to solve such dispute and how did neighbor in Shasta county had been relatively successful to resolve disputes between landowners and ranchers.

The finding of Ellickson’s study though supports Coasean Parable that the rule of liability for animal trespass does not affect, the allocation of resource, it is however not because of low transaction costs, but on the contrary, the high transaction costs.

Ellickson suggests in this study:

1. In order to apply Coasern Theorem, one has to assume that all parties of dispute have perfect knowledge of law, however, that was not the case in reality. Shasta county residents’ knowledge to Animal trespass law Legal are insufficient, no one, he found in Shasta county had a complete working knowledge of such law.
2. Even for legal professional, their knowledge of trespass is not adequate.
3. People rely on norms rather legal rules as their basic source of entitlements
4. The control of deviants are four types:
• Self help retaliation, from gossip sanction to violent retaliation
• Reports to county authorities
• Claims for compensation informally
• Formal legal claim to recover damages. are costly to learn and enforce
5. The live-and-let-live philosophy is overwhelming among residents, firstly, they see the animal trespass as an inevitable part of their life; secondly, they expect “give and take” attitude among neighbors, the norm of good neighbors constrain them from further legal action against each other.

The study of Shasta country shows that under such conditions, residents more likely solve their dispute among themselves and ignore the formal legal rules.

He concluded that law-and-economics scholars should pay more attention to transaction cost. High cost of legal preceding and high costs to learn and enforce the law are main reasons that a rational actor applies informal norms, not law, to evaluate the propriety of human behavior. Further more, the intertwined relationship between farmers and ranchers prompt them to employ non-legal methods of dispute resolution.

Question: Is that right to say that in less developed society, people more likely rely on social norms to settle disputes, while in more developed society, on legal system>