Document Type



Law and Economics


In an unusual turn of events, American Electric Power Company recently acquired the entire small town of Cheshire, Ohio. The buyout was intended to put an end to a serious pollution problem caused by the company's giant power plant, which was located at the edge of town. Although the plant was worth substantially more than the town, no simple Coasean bargain guided the buyout. This Article combines ethnographic research into the Cheshire buyout with theoretical insights from law and economics to present an empirical and theoretic challenge to the standard account of nuisance disputes. It explores the transaction in detail and explains what prevented the collective action and holdout problems usually thought to hinder bargaining with groups. Specifically, this Article shows how incorporating the role of community into conventional theory offers a new understanding of the likelihood of holdouts, the importance of community dynamics, and the interdependency inherent in community-wide nuisance actions. Finally, this Article briefly explores the implications of this new understanding for tort law, collective action, and the law of takings.