An Economic Analysis of Boomer v. Atlantic Cement Co.
By Michael Cohn
Case Summary
•Atlantic Cement Co. erects a $40,000,000
cement plant in 1962
•Plant emits dusk, smoke and vibration
causing a nuisance to neighbors in
surrounding areas
•Plaintiff Boomer files for injunction on behalf
of inhabitants of the surrounding area on the
basis that nuisance had been proven
•Injunction is denied and damages are
awarded
•Case gets appealed
•Injunction is denied citing the “large disparity
in economic consequences of the nuisance
and the injunction”
•Temporary injunction is granted which will be
vacated once Atlantic Cement Co. pays
permanent damages
Legal Issues
• Servitude on Land
Agreements between parties for mutual
use of land
Can courts force parties into servitude?
• Nuisance Law
Illegal use of property which causes
damage to either individuals or the
general public
If a nuisance interferes with a person’s
quiet, peaceful or pleasant use of his/her
property it may the basis for a lawsuit
for damages and/or an injunction
•Public vs. Private Goods
• Federal Clean Air Act of 1970
Air pollution was a serious problem at the
time
The act’s purpose was to protect the
general public from hazardous air
pollutants
• Property Law
What can a person do with his/her
property?
Remedies for violations of property rights
oDamages and Injunctions
Economic Issues
Figure. 1
Atl Cement Co
Boomer et al
Net Total
($40,000,000)+ ($185,00)=
($40,185,000)
$185,000
($40,000,000)
Pollution is considered a public good
(“bad”)
Nonrivalrous and nonexcludeable
goods should be owned by the state
Many parties involved
Most efficient outcome cannot be
reached by private negotiation
Relates back to Coase Theorem (see
Figure. 2)
Figure. 2
•Efficiency
Allocate resources to maximize output
Enjoin Atlantic Cement from operating the
plant vs. awarding damages
$40,000,000 plant vs. $185,000 in current
damages plus future damages
Injunctions are the least efficient outcome
in most cases
oAssumes no bargaining
Injunction
Figure. 3
Awarding Damages
($185,000) + (Future
Damages)
$185,000 + Future
Damages
0
Threshold
Bargaining succeeds;
Legal rights do not
matter to efficiency
Bargaining fails; Legal
rights facilitate efficient
outcome
Conclusions
•Judge Bergan’s decision to award
permanent damages is the most efficient
outcome
Future damages<Cost of Injunction
Low ←Transaction Costs→ High
•Externalities
Costs involuntarily imposed on one
person by another
o Atlantic Cement inflicting pollution
costs on surrounding neighbors
Outside the market system of exchange
Need to be priced in order to overcome
the incentive problem
Issue of trying to internalize a public
“bad”
•Is it the most fair outcome?
 Boomer and residents forced to live with
air and noise pollution
What if the situation worsens?
•Judge Jasen dissents favoring fairness over
efficiency
Assessing damages in lieu of an
injunction is “licensing continuing wrong”
When a nuisance is found the owner
must be enjoined
Forced servitude on land
oUnconstitutional