Question

3. Consider the following case: Vincent v. Lake Erie Transport (1910, Minnesota). In late November, 1905, the steamship Reynolds, owned by the defendant, was moored to the plaintiff's dock in Duluth Minnesota and discharging cargo. A storm suddenly arose on Huron. The Reynolds signaled for a tug to take her away from the dock, but because of the storm, none could be found. The ship remained moored to the dock during the storm. The violence of the storm threw the steamship repeatedly against the plaintiff's dock, causing damage in the amount of $300. The plaintiff asked for that amount. The Lake Erie Transport Company contended that its steamship was an involuntary trespasser. The Reynolds had tried to leave the plaintiff's property but had not been able to do so through no fault of its own. The court held that the plaintiff was entitled to damages. Was this outcome efficient? Why or why not. Provide an argument to support your conclusion.

Answer 1

If we look at this problem with a public goods perspective that we study in economics. We have learned that there are goods which give us private benefit as well as marginal external benefit to the society.e.g. public education gives us a private benefit as we will be able to get a job and earn a living at the same time I will be a valuable contribution to the society because I will not create a nuisance in the society , I will be a better citizen, which is a good thing for every other resident of the country , this is the marginal external benefit. Thus it makes sense for the government to provide cheap education because it has a marginal external benefit in addition to private benefit.

On the contrary an industrialist who produces goods and dumps his waste in a river because he has nowhere else to dump it faces a private cost in terms of input required for production process but we as a society face a marginal external cost due to the pollution of our common good i.e. river , thus it is important that the cost required to clean the river is recovered from the industrialist in forms of tax.

If we look at the problem from an economic viewpoint even though the defendant does not intentionally cause harm but he imposes a marginal external cost just like the industrialist who has no place to dump his waste,so its no fault of his.In the same light, it is appropriate to recover the money from defendant . Thus this outcome is efficient.