Final answer:
Right-of-Way rules are legal guidelines for traffic safety and determine who has priority in different road scenarios. Property rights define legal ownership and how it is protected in conflicts, such as disputes over damage risks between a farmer and a railroad company. Both sets of rules organize and dictate responsibilities and interactions among individuals or entities.
Step-by-step explanation:
Understanding Right-of-Way Rules and Property Rights
Right-of-Way rules are legal guidelines that dictate how road users should behave at intersections, merging lanes, and other locations where it is necessary to determine who has the priority to proceed first. These rules are essential for traffic safety and the prevention of accidents. In contrast, property rights refer to the legal rights of ownership over resources including land, buildings, or goods, and how the rights of different owners are recognized and protected in cases of potential conflict or externality such as the case mentioned between a farmer and a railroad company over field burning by sparks. In the scenario described by Coase, clearly defined property rights would assign responsibility and costs for reducing risks.
Understanding how property rights function in real-world situations can be demonstrated through Coase's example where either the farmer or the railroad will seek the least costly method to reduce the risk of damage caused by one party on the property of another. This clearly illustrates how the existence of firmly established property rights can lead to efficient solutions to disputes between different parties.
In other words, both Right-of-Way and property rights are sets of rules that organize interactions and responsibilities among individuals or entities. While the former manages immediate road-user behavior, the latter deals with longer-term rights and responsibilities of ownership.