Assignment of property rights: To me, it seems pretty clear that the property rights belong to the recliner, for two reasons. First, there is a functional recline button on the chair- when airlines don’t allow you to recline (in front of emergency exit rows, for example), they disable the functionality as opposed to just asking you to not recline. Second, the device used to prevent the seat from reclining is banned, and it’s only a small logical jump from “preventing an activity is banned” to “said activity is allowed.”My problem here is that just because I have a product that will do X, doesn't mean I have the right to do X. If I buy a gun, which has the ability to shoot people, doesn't mean I have the right to shoot people. As to the second point, the fact that I can't do Y to stop you doing X doesn't mean you have the right to do X. Just because I can't shoot you to stop you peeing on my foot doesn't mean you have the right to pee on my foot.
Beggs goes on to say,
That said, this scenario highlights the fact that it’s not only the assignment of property rights that is important, but also the recognition and respect for said property rights. (When multiple parties believe that they have the property rights, you get coexisting news headlines such as “Don’t Want Me to Recline My Airline Seat? You Can Pay Me” and “Don’t Want Me to Spit on You When You Recline Your Airline Seat? Pay Me.” as opposed to effective bargaining.)This I think is the real point. If people don't know what the rights are or if different people think the rights have been defined differently, then its as if the rights have not been defined. Without clearly defined, well known and respected property rights the Coase Theorem doesn't apply.
Of course this just raises the question of why don't airlines delineate rights more clearly?