Rent control: a friend or foe

Abstract

In this article, I address the by-product of the property reform—perpetual land lease—with a case study of Latvia. Contributing to scholarship on the challenge of property reforms after generations of dispossession, I examine the economic meaning of property restitution in this post-Soviet context. Using process-tracing and policy analysis techniques to examine the creation and implementation of Latvia’s restitution policy in the aftermath of independence from the Soviet Union, I tackle the research question: “Have the property rights of the parties been considered during these reforms?” I use two theories to answer this question: one of law and economics, by applying the theory of efficient regulation and Normative Hobbes Theorem (coalesced from the Coase Theorem and the Hobbes Theorem) and the other of transitional justice, by analysing the perpetual lease relations as part of restitution policy, aimed at providing justice to victims of the Soviet occupation and nationalization. In this paper, I illustrate that state intervention by normatively fixing the lease fee is necessary to prevent infringement of property rights of the landowners, thus ensuring that restitution as a transitional justice measure has reached its aim.