THE JOURNAL OF LAW AND ECONOMICS to price for the amount of planting undertaken and any expansion would have reduced the profits of the farmer. In the new situation, the existence of crop damage would mean that the farmer would sell less on the open market but his receipts for a given production would remain the same, since the cattle Of if cattI aising commonly involved the destruction of crops, the coming into existence of a cattle- raising industry might raise the price of the crops involved and farmers would then extend their planting. But i wish to confine my attention to the individual farmer I have said that the occupation of a neighbouring property by a cattle wiser would not cause the amount of production, or perhaps more exactly the amount of planting, by the farmer to increase. In fact, if the cattle-raising has any effect, it will be to decrease the amount of planting. The reason for this is that, for any given tract of land, if the value of the crop damaged is so great that the receipts from the sale of the undamaged crop are less than the total costs of cultivating that tract of land, it will be profitable for the farmer and the cattle-raiser to make a bargain whereby that tract of land is left un cultivated. This can be made clear by means of an arithmetical example Assume initially that the value of the crop obtained from cultivating a given tract of land is $12 and that the cost incurred in cultivating this tract of land is $10, the net gain from cultivating the land being $2. I assume for purposes of simplicity that the farmer owns the land. Now assume that the cattle- raiser starts operations on the neighbouring property and that the value of the crops damaged is $1. In this case $11 is obtained by the farmer from sale on he market and $1 is obtained from the cattle-raiser for damage suffered and the net gain remains $2. Now suppose that the cattle-raiser finds it profitable to increase the size of his herd, even though the amount of damage rises to $3 which means that the value of the additional meat production is greater than the additional costs, including the additional $2 payment for damage. But the total payment for damage is now $3. The net gain to the farmer from cultivat ing the land is still $2. The cattle-raiser would be better off if the farmer would agree not to cultivate his land for any payment less than $3. The farmer would be agreeable to not cultivating the land for any payment greater than $2. There is clearly room for a mutually satisfactory bargain which would lead to the abandonment of cultivation But the same argument applies not only to the whole tract cultivated by the farmer but also to any d on the assumption that the alternative to cultivation of the crop is abandonment of cultivation altogether. But this need not be so There may be crops which are less liable to damage by cattle but which would not profitable as the crop grown in the absence of damage. Thus, if the cultivation of a new r of $1 instead of $2, and the size of the herd whicl with the old crop would cause $1 damage with the new crop, it ould be profitable to the cattle-raiser to pay any sum less than $2 to induce the farmer4 THE JOURNAL OF LAW AND ECONOMICS to price for the amount of planting undertaken and any expansion would have reduced the profits of the farmer. In the new situation, the existence of crop damage would mean that the farmer would sell less on the open market but his receipts for a given production would remain the same, since the cattle￾raiser would pay the market price for any crop damaged. Of course, if cattle￾raising commonly involved the destruction of crops, the coming into existence of a cattle-raising industry might raise the price of the crops involved and farmers would then extend their planting. But I wish to confine my attention to the individual farmer. I have said that the occupation of a neighbouring property by a cattle￾raiser would not cause the amount of production, or perhaps more exactly the amount of planting, by the farmer to increase. In fact, if the cattle-raising has any effect, it will be to decrease the amount of planting. The reason for this is that, for any given tract of land, if the value of the crop damaged is so great that the receipts from the sale of the undamaged crop are less than the total costs of cultivating that tract of land, it will be profitable for the farmer and the cattle-raiser to make a bargain whereby that tract of land is left un￾cultivated. This can be made clear by means of an arithmetical example. Assume initially that the value of the crop obtained from cultivating a given tract of land is $12 and that the cost incurred in cultivating this tract of land is $10, the net gain from cultivating the land being $2. I assume for purposes of simplicity that the farmer owns the land. Now assume that the cattle￾raiser starts operations on the neighbouring property and that the value of the crops damaged is $1. In this case $11 is obtained by the farmer from sale on the market and $1 is obtained from the cattle-raiser for damage suffered and the net gain remains $2. Now suppose that the cattle-raiser finds it profitable to increase the size of his herd, even though the amount of damage rises to $3; which means that the value of the additional meat production is greater than the additional costs, including the additional $2 payment for damage. But the total payment for damage is now $3. The net gain to the farmer from cultivat￾ing the land is still $2. The cattle-raiser would be better off if the farmer would agree not to cultivate his land for any payment less than $3. The farmer would be agreeable to not cultivating the land for any payment greater than $2. There is clearly room for a mutually satisfactory bargain which would lead to the abandonment of cultivation.4 But the same argument applies not only to the whole tract cultivated by the farmer but also to any 'The argument in the text has proceeded on the assumption that the alternative to cultivation of the crop is abandonment of cultivation altogether. But this need not be so. There may be crops which are less liable to damage by cattle but which would not be as profitable as the crop grown in the absence of damage. Thus, if the cultivation of a new crop would yield a return to the farmer of $1 instead of $2, and the size of the herd which would cause $3 damage with the old crop would cause $1 damage with the new crop, it would be profitable to the cattle-raiser to pay any sum less than $2 to induce the farmer