A solution to the reclining airplane seat dilemma


Anybody who has to fly home for Christmas will know the reclining seat dilemma. It's kind of annoying if the person in front of you reclines their seat and usually forces you to do the same. (Which puts the person behind you into a tight spot and forces them to recline too, and so on.) Josh Barro, invoking the great economist Ronald Coase, suggests paying the person in front not to recline, but Virginia Postrel disagrees:

This solution, however, is highly unrealistic. It waves away the central theme running throughout Coase’s work: the problem of transaction costs. Making and enforcing contracts, Coase emphasized, isn’t free. And when it comes to airline seats, it’s a lot more costly than Barro admits.

In theory, I could have offered the guy in front of me money to sit up, but even assuming that my fractured Italian had been up to conducting the negotiations and that he wouldn’t have gotten nasty in response to my overtures, how would I have enforced the deal? It’s not a simple problem, and certainly not a cost-free one. Suggesting that as long as property rights are well-defined, you can simply make a deal misunderstands what Coase was all about. He was obsessed with transaction costs. They explain why we have institutions (including firms), not just individual bargains.

It's also kind of embarrassing to do this, because some eccentrics think 'commodifying' parts of everyday life is a bad thing. Postrel's solution is a little more elegant. Divide the plane down the middle, with seats on the left able to recline and seats on the right fixed in position. If it turns out that people prefer one side to the other, charge more for that and less for the other. It's so simple it might just work.