Rothbard's McDonald example - important question

Pavel posted on Wed, Dec 17 2008 2:24 AM

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Good afternoon.

I'm a scholar working on the libertarian information theory in St. Petersburg, Russia.

There's one particular question I would like to ask  members of this community. And I apologize if it had been discussed before.

So, let me start by quoting from Rothbard's Ethics of Liberty, the example of residents of various neighborhoods preventing McDonald's food stores from opening in their area:

"In the libertarian society, however, where the streets would all be privately owned, the entire conflict
could be resolved without violating anyone's property rights: for then the owners ofthe streets would have the right to decide who shall have access to those streets, and they could then keep out "undesirables" if
they so wished.
Of course, those street-owners who decided to keep out "undesirables" would have to pay the price - both the actual costs of policing as well as the loss of business to the merchants on their street and the diminished
flow of visitors to their homes. Undoubtedly in the free society there would result a diverse pattern of access, with some streets (and therefore neighborhoods) open to all, and others with varying degrees of restricted access." (Selection in bold - mine).

So, the issue in question is - if the street owners have to compensate the loss of business to the merchants (McDonald's), does it mean that the merchants (owners of McDonald's) have to compensate the residents too for the damage done to their property? The price of the houses near McDonald's might decrease, because noone will want to live there, or at least the area will become much less appeailng.

Any help will be greatly appreciated.