A model of externalities with sequential location choice is developed. The first mover decides on location before it knows the identity of the second mover. Joint location leads to a negative externality. The court, having limited information, allocates property rights over the externality based...

One of Coase's central insights is that distinguishing between the generator and recipient of an externality is of limited value because externality problems are reciprocal. We reconsider the relevance of the identity of the generator in a model with non-contractible investment ex ante but...