Alain Marciano and Giovanni Battista Ramello
This entry sets out the law and the economic theory of nuisance. Nuisance law serves a regulatory function: it induces actors to choose the socially preferred level of an activity by imposing liability when the externalized costs of the activity are substantially greater than the externalized benefits or not reciprocal to other background external costs. Proximate cause doctrine plays a role in supplementing nuisance law.
Keith N. Hylton,
Encyclopedia of Law and Economics
(Alain Marciano and Giovanni Battista Ramello ed.,
Available at: https://scholarship.law.bu.edu/faculty_scholarship/380