Arizona is re-thinking its open range law. Dan Cole, blogging at Law, Economics & Cycling, is reminded of Ronald Coase (and specifically Robert Ellickson’s law review article “Of Coase and Catttle“). Cole summarizes the situation:
Arizona is an “open range” state, which means that cattle can roam at will. Ranchers do not have to fence them in (but they are responsible for collecting wandering cattle) neighbors must fence them out. From a Coasean point of view, roaming cattle and the harm they cause constitutes a joint-cost problem created by both cattle ranchers and neighbors. The chief solution to the problem is for someone to build a fence. The chief question is: who should have to bear the costs of building and maintaining fences. Ultimately, what “open range” laws do, by insulating cattle ranchers from liability (though not as much as the ranchers might believe) for trespassing cattle, is to allocate the costs of fencing out to the neighbors. The fight going on now in Arizona is about changing the law from “fencing out” to “fencing in,” which would basically just reallocate the costs to the cattle ranchers.
The issue is more complicated than who pays for damages to vegetable gardens inflicted by wandering cows. An important current issue in Arizona is car-cattle collisions. Under “open range” rules, the driver may be liable to damage to the cow, whereas with a “closed range” rule the rancher may be liable to damage to the vehicle.
Cole offers some additional detail and nuance, so go read his post.