Reference no: EM132214461

Under the ancient law of admiralty, the finder of an abandoned shipwreck becomes the owner according to the Law of Finds. Use this information to answer the following questions.

a. What type of legal rule is this?

b. In general, is this legal rule efficient? (i.e. discuss both the good and bad incentives created by this legal rule).

c. The Abandoned Shipwreck Act of 1987 (43 U.S.C. 2101-2106) abrogated admiralty law for wrecks found in U.S. waters, awarding ownership instead to the state in whose waters a wreck is found. The state can then develop its own reward scheme. Can we say that the reward scheme will be efficient? Explain your answer.

d. States have been able to develop their own reward schemes since the Abandoned Shipwreck Act of 1987 (43 U.S.C. 2101-2106). Indicate the theoretically optimal reward scheme. How, might the state achieve this in practice? Explain your answer.

2. According to the economic theory of fair use, book reviewers are allowed to quote brief passages from the book being reviewed, because the author and publisher, if asked, would consent to such a use. In this explanation, quotations in unfavorable reviews would not qualify as fair use. Why is this distinction unlikely to be efficient? Explain your answer.