San Antonio is paying bars, clubs and restaurants to keep the noise down (how might this relate to the Coase Theorem?)

The city’s Noise Mitigation Reduction Program just handed out grants of up to $7,500 each for sound-reducing curtains, doors and windows and the like.

By Marc Duvoisin of The San Antonio Express-News. Excerpt:

"Nightclubs, bars and honky-tonks often have fraught relations with their residential neighbors. Just ask the folks who live and do business along St. Mary’s Strip.

Sometimes, the neighbors complain that customers are monopolizing street parking. Sometimes, it’s the noise that has them at wit’s end.

The city of San Antonio is trying to do something about the latter. It’s distributing money to bars, restaurants, clubs, recording studios and other small businesses across the city to help them keep the noise down and let the neighbors catch some shut-eye.

The Noise Mitigation Grants Program aims to help “noise-amplifying small food and beverage businesses better equip their locations to reduce externally emitted sound.”"

This reminds me off THE COASE THEOREM.

It is an economic idea from the Nobel Prize winning economist Ronald Coase. It should not matter who has the property right in determining the most efficient outcome.

There does not need to be any special rules made by the a board or city council. Let the bars and the residents negotiate. If it really matters to the residents, they will pay the bars to not play music or erect barriers to reduce the noise to an acceptable level.

If the residents placed a $200 value on having quiet and if paying the bars $100 to not play music or erect effective barriers, then this will happen if the parties are allowed to negotiate.

Or if the bars placed a $300 value on having music, they could pay the residents $250 to not protest (that is more than they value the quiet).

Either way, we get a policy where the benefit outweighs the cost and that is efficient. 

One problem is that there are many parties involved and negotiation can be difficult in that case. But there is no guarantee that the government can find the best solution. They would have to know how much residents value the quiet, how well the purchased barriers work, keep track of how well they are working once they are installed, make sure the bars don't misspend the money and so on.

Related posts:

Trees vs. Solar Power? (2008)

Does the Coase Theorem tell us what to do about the noise from pickleball? (2022)