Grand Fix to a Canyon Problem

Parking is, for the most part, a nightmare in Charlottesville especially if your driveway has a canyon running down the middle of it making it difficult or near impossible to park there. On 14th St there are two houses, 316 and 318, that are adjacent to one another and occupied by my friends. They are great neighbors to each other and they even share a gravel driveway that hasn't been repaired in years, so due to erosion it now looks more like a fjord, imposing massive negative external costs on both sets of tenants. The houses are owned and leased by separate companies, A and B, that, to an Economics major, points to a possible Coasean solution. Currently, fixing the driveway (good F) is under produced because of its large positive production externality it would place on the neighboring house. This leads to an allocative inefficient level of F, but if the city government were to clearly define that company A has property rights to the driveway and excluded the tenants of company B, given zero transactions costs, the bargaining of the companies would lead to an allocative efficient level of good F and the driveway would be fixed. According to the Coase theorem, this equilibrium would be reached regardless of the company, A or B, is assigned the property rights.

Easy right?! Well, this model has layers to it that could prevent a perfect solution as described. One objection to the model could be that the agents bargaining are the owners and not the tenants which leads to what is known as the principal-agent problem, where asymmetric incentives causes inefficiencies and college students may just not care enough to start this process.  A second appeal to this could be that neighbors hold some sort of monopoly power over one another due to the high costs associated with moving, which would make rent extraction possible in the bargaining meetings. It's never fun when your car ends up in a ditch, but if this isn't fixed my friends will continue to park in one, so hopefully economics can dig them out of this hole...literally.

(Side note: unfortunately when I stopped by to take the picture, all the cars were parked over or in the canyon but please stop by and see for yourself)