Trouble Brewing

Them city folks up in Alexandria have got a real Coasian quandary on their hands.  In the community of Del Ray, a man named Gaver Nichols is building a big garage two feet from the home of his next-door neighbors (the Linehans), blocking the view from their kitchen window.  As you can see from the picture below, Mr. Nichols seems to have other locations for the garage on his property but he is diggin in his heals and puttin it right next to the neighbor's house! Peaches and gravy!

Maybe this is the allocatively efficient quantity of garage but them durn Linehans ain't happy.  What would Ronald do?  Well, old Gus think this is a clear cut example of a negative externality.  It is complicated because there is a dispute about the property rights. Mr. Nichols got a permit to build the garage (which seems clear to old Gus), but them durn Linehans are challenging that.  Once they get that sorted out, they will also need to somehow overcome the very significant transactions costs that accompany the big pot of pure hate that is brewing.

In the end, if they work out the property rights and somehow reduce the transactions costs, the garage will be built in that spot only if Mr. Nichols values that garage in that spot more than the Nichols enjoy the old view from their kitchen window.  Porckchops and turnips, this is not going to be easy!