Paul Walker has a series of posts* on the Coase Theorem and Josh Barro's column on property rights and reclining airline seats.
This had all seemed really very simple to me at the outset. It still seems really very simple; I don't know why everyone else has complicated it so much.
Each passenger is in a contract of carriage with the airline.
The airline has decided to put the recline button for my seat on the arm of my seat rather than on the back of my seat. The airline, which is profit maximising, has decided that the rights should lie with me, the recliner, rather than with the person behind me. I can push the button, and recline, but the person behind can offer to pay me not to. If the airline had not wished to grant me this right, the button would not be there for my use.
In the alternative, where the button were placed on the back of the seat, I would have to ask the permission of the person behind me that he might push the button. He might seek compensation for doing so, or the whole negotiation might start a fight.
The airline could be choosing the option that minimises the number of cross-row unpleasant seat discussions, since only a subset of reclinings will yield such discussions under the status quo where all of them would require it under the alternative. But if the gains from being able to recline were sufficiently low, they could choose to install seats that did not recline.
If enough anti-recliners took sufficient umbrage, there'd be returns to offering a no-reclining section. That that also hasn't happened says something about expressed versus revealed preferences.
Paul says it isn't clear where property rights lie. But recall that the interesting cases in Coase are always in the high transaction costs worlds. There the judge is called upon to assign default rights so that problems are avoided at lowest cost. The airlines are the judges. They compete with one another. They all have assigned the default rights this way when some could have chosen otherwise. If they've all set the default this way, when they could just have easily flipped it the other way, should reasonable people not infer that property rights lie with he who has the switch?
That some individuals wish to force a transfer through use of anti-reclining devices does not indicate that the existing rights are unclear unless we also believe that a bank robber indicates uncertainty about true ownership of the cash in the till.
Full disclosure: the only time I would ever recline my seat is on a long overnight flight where most people hope to sleep.
* In order: here, here, here, here, here.