Jessica Owns Property at the Bottom of a Hill

question 34

Essay

Jessica owns property at the bottom of a hill. After a heavy rain, her property is flooded. Jessica builds a dam to protect her property, but the dam causes her neighbor's property up the hill to flood. Can the neighbor sue Jessica for damages? Explain.

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Definitions:

Numeraire Good

A commodity selected as a standard of value and used as the unit of account in economic models, facilitating comparisons between different goods or services.

Initial Endowment

The initial allocation of assets, income, or resources that an individual, institution, or country possesses.

Min

The smallest or least possible amount, quantity, value, or degree.

Pareto Optimal Allocation

A distribution of resources in which it is impossible to make any individual better off without making at least one individual worse off.