Of Coase and Cattle: Dispute Resolution among Neighbors in Shasta County

Abstract

A case study of cattle trespass disputes in Shasta County, CA, illustrates circumstances that prompt individuals to reject formal litigation in favor of informal norms. The fieldwork tested economist Ronald Coase's (1981) theorem that disputants depend solely on formal legal rules to ascertain their entitlements, which assumes that changes in liability laws will not affect the allocation of resources when transaction costs are low. In Shasta County, which has varied cattle trespass liability rules, the failure of laws to affect resource allocation was due to high, not low, transaction costs. The physical & social characteristics of the area are described, along with the benefits & costs of fences. In open-range areas, the legal rule that a cattleman is not liable for unintended trespass was superseded by the norm that an owner should supervise his cattle. Discipline is enforced by negative gossip & other reprisals. Different informal methods of resolution are examined, suggesting the need for law & economics scholars to reconsider the impact of transaction costs on the resolution of disputes. 2 Figures. J. Lindroth