To illustrate, assume that farmers like to eat more corn and less beef, whereas ranchers like to eat more beef
and less corn.
Assume that farmers and ranchers own their own land, that transaction costs are zero,
and that fence is costly relative to their incomes. The change from “ranchers’ rights” to “farmers’
rights” will increase the income of farmers and decrease the income of ranchers. Consequently, the
demand for corn will increase, and the demand for beef will decrease. Greater demand for corn
requires the planting and fencing of more cornfields.
Thus, the change in law causes the building of