Property Lost in Translation

Abstract

In this Essay, we explore the phenomenon of localized property systems and the interactions of such localized property systems with property law. Our Essay aims to provide the beginnings of an exploration of localized property systems and translation problems, rather than a complete survey. In our exploration, we look both at the local systems themselves, and at their implications for our broader understanding of the world of property. We begin by showing the ubiquity of localized property systems. Some appear quite exotic, such as the informal property rights in favelas in Brazil, collective property rights in kibbutzim in Israel, or even virtual property rights in computer games. Others localized property systems are quite mundane, such as the quasi-property rights in urban parking spaces, or the agreed-upon property arrangements among roommates. In all events, localized property systems serve some need of the localized property users. The localized systems may be due to lower transaction costs thanks to ongoing relationships (roommates), ideological preferences (kibbutzim), flaws in property law or its satellite regulatory systems (favelas) or a variety of other reasons. Whatever the reasons for the localized property systems, they are not costless. All localized property systems entail translation costs with the wider state property systems around them. Translation costs result from incompatibilities, as well as information and enforcement costs. One way of understand the phenomenon of localized property systems is through the economics of network effects. Property law systems, like other legal systems, have greater utility with greater numbers of adherents. These network effects, and the translation costs entailed in using localized property systems, create pressure for localized property systems to converge with the larger state property systems around them. But pressures for convergence may be resisted. Convergence is itself costly. The costs of transitioning may bar convergence, or the continued utility of the localized property system may render convergence not cost-effective. Additionally, politics may block efficacious convergences of property systems. One potential insight stemming from our analysis is in the theory of commons property: translation costs must be taken into account when examining collective action solutions to tragedies of the commons.