In the latter case, the neighbor has a strong economic incentive to treat lawsuits by aggrieved neighbors as a cost of doing business and simply build it into the rental price charged to guests - which might be quite feasible if renting out a sufficiently desirable location.

The cost to the aggrieved neighbor of launching multiple legal actions is proportionately greater since the neighbor's recovery necessarily takes place in arrears and is not supported by a stream of guest rental income. Absent an ability to recover punitive as well as economic damages, the rentier may well find it more profitable to persist.

This leads to an interesting application of the Coase theorem, of course. If you find that your neighbor is renting out on AirBnB and you have a serious anticipation of economic loss, you are in a good position to bring your neighbor to the negotiation table and solicit compensation up front - in other words, to demand your neighbor buy you off for the predictable inconvenience. This idea will seem anathema to many entrepreneurs but it has the economic advantage of predictability, as the long-term economic cost will be the same while the transaction costs may end up being lower.