The Fearon Corollary: Private Property Rights as War

Abstract

This Article models private property rights as a conflict resolution mechanism and shows that for the Coase Theorem to be consistent on its own terms, private property rights must generate the Pareto-optimal allocation of scarce resources among all feasible conflict resolution mechanisms. This conclusion is termed the Fearon Corollary. Equating the imposition of private property rights to conflict/war, the following question is considered: if pre-conflict common ownership is socially-optimal, under what conditions will disputing parties fail to bargain around the conflict? In addition to the explanations identified by Professor Fearon, the present article offers an additional behavioral explanation evidenced in the institution of private property rights itself, and, in particular, in state “Castle Doctrine” laws that permit the use of lethal force in defense of real property. To promote the socially-optimal shared use of contested scarce resources, a role for the courts is suggested where de facto common property rights are established by rendering private property rights random or unclear — judicial behavior that stands in sharp contrast to the commonly understood normative implications of the Coase Theorem. This uncertainty weakens private property rights, reducing the expected spoils of costly conflict, and, in turn, creates an incentive for disputing parties to cooperate in the form of negotiated settlement agreements. In this way, less secure claims to private property promote social cooperation.