▁smoke ▁n uis ance ▁was ▁caused ▁both ▁by ▁the ▁man ▁who ▁built ▁the ▁wall ▁and ▁by ▁the ▁man ▁who ▁lit ▁the ▁fires ”. ▁Under ▁this ▁framework , ▁the ▁wall - builder ▁is ▁not ▁leg ally ▁li able ▁for ▁the ▁n uis ance ▁suffered ▁by ▁his ▁neighbor ▁alone . ▁In ▁this ▁example , ▁Co ase ▁see ks ▁to ▁ill uminate ▁the ▁conditions ▁for ▁optim izing ▁the ▁allocation ▁of ▁rights , ▁the ▁case ▁which ▁both ▁parties ▁consider ▁harm . ▁Here , ▁Co ase ▁is ▁referencing ▁P are to ▁efficiency ▁allowed ▁by ▁the ▁prev ail ing ▁“ pr icing ▁system ”. ▁▁▁ ▁Co ase ▁extends ▁this ▁framework ▁throughout ▁his ▁development ▁of ▁a ▁functional ▁theorem ▁concerning ▁external ities . ▁Co ase ▁arg ues ▁that ▁these ▁rights ▁are ▁integrated ▁into ▁an ▁actor ' s ▁decision - making ▁process ▁through ▁their ▁unique ▁cost ▁function . ▁These ▁costs ▁are ▁not ▁isolated ▁in ▁nature , ▁according ▁to ▁Co ase , ▁who ▁concluded ▁“ The ▁cost ▁of ▁exer cis ing ▁a ▁right ▁( of ▁using ▁a ▁factor ▁of ▁production ) ▁is ▁always ▁the ▁loss ▁which ▁is ▁suffered ▁elsewhere ” ▁ ▁The ▁ult imate ▁th esis ▁is ▁that ▁law ▁and ▁reg ulation ▁are ▁not ▁as ▁important ▁or ▁effective ▁at ▁helping ▁people ▁as ▁law y ers ▁and ▁government ▁pl ann ers ▁believe . ▁Co ase ▁and ▁others ▁like ▁him ▁wanted ▁a ▁change ▁of ▁approach , ▁to ▁put ▁the ▁bur den ▁of ▁proof ▁for ▁positive ▁effects ▁on ▁a ▁government ▁that ▁was ▁interven ing ▁in ▁the ▁market , ▁by ▁anal ys ing ▁the ▁costs ▁of ▁action