Enforcement Of Property Rights Research Articles

Institutional Fantasylands: From Scientific Management to Free Market Environmentalism

This article exposes the utopian parallels between scientific management and free market environmentalism as institutional paradigms for governing environmental resources. It shows that just as traditional economic analysis of environmental problems often ignores the imperfections of public institutions, the free market environmentalist perspective reflects a comparably naive view of institutions by focusing narrowly and simplistically upon the delineation and enforcement of property rights. A responsible analysis of institutional choice requires consideration of the broad array of actual and potential public institutions and the many checks and balances available for improving and constraining regulators' behavior.

Opting out of the Legal System: Extralegal Contractual Relations in the Diamond Industry

Opting out of the Legal System: Extralegal Contractual Relations in the Diamond Industry

For One Concept of Liberty

The essay enquires whether a negative concept of liberty suffices for political and legal discourse. A contemporary argument alleging the inviability of a negative concept of liberty is examined and exposed as wanting, while street-smart claims on behalf of a ‘positive’ concept of liberty are shown to be deployments of the negative concept, misdescribed. The truth that lack of money is lack of freedom in societies with a money economy and coercively enforced property rights is established with supporting examples, and its implications for need satisfaction assessed. Judgment is concluded that the negative concept of liberty is both the only viable concept of liberty and demonstrably adequate for morally sensitive engagement with political life.

THE DISTRIBUTION OF WEALTH AND THE EFFICIENCY OF INSTITUTIONS

This paper explores the efect on economic efficiency of the distribution of wealth and systems for enforcing property rights. We construct a two‐person, two‐period economy in which each person can consume, plant, transfer or steal corn. We find circumstances in which redistribution of wealth is Pareto optimal and in which increasing sanctions against theft to their maximum level is not. These results suggest that it is not only important to consider distribution in the design of property institutions, but also that redistribution itself may serve to increase the efficiency of systems of property rights.

Homesteading and Property Rights; Or, "How the West Was Really Won"

Homesteading and Property Rights; Or, "How the West Was Really Won"

Squatters' Rights and Urban Development: An Economic Perspective

Up to 35 per cent of urban dwellers in Third World cities are squatters. The characteristics of the squatting phenomenon are both varied and puzzling. Of particular interest are the observations that (1) landowners often do not collect rent from squatters for use of the land and (2) costly evictions are sometimes used without subsequent development of the land, which in many cases is resettled by squatters. We present an economic model of landowner- squatter interaction which is consistent with these observations. This model is then used to enlighten certain aspects of socially optimal land management policy for squatter areas. The phenomenon of squatting in Third World cities is widespread and growing. Recent studies have shown that up to 35 per cent of the total urban population of developing countries lives in squatter settlements. The current and mostly non-economic literature has mixed views regarding whether squatting is a problem or a solution to efficient urbanization. Attitudes concerning squatter settlements range from disgust concerning living conditions in such illegal (or quasi-illegal) spontaneous settlements to admiration for the resourcefulness of the inhabitants as they provide themselves with at least some shelter using the minimal inputs available.' The literature has consequently not provided a useful conceptual framework to guide government policy. In this paper we develop a formal economic model to understand the various forms of squatting in Third World cities. We then use the model to address some vexing policy questions: Do private landowners evict squatters too frequently or too infrequently? Should any or all squatters be evicted? Should they be provided with basic infrastructure services? Should they be given unambiguous property rights to the land they occupy? Applying the 'Coase Theorem' to the squatting problem, we might conclude that the observed rate of evictions was just right. Evictions occur only if the value of land use to squatters is less than the sum of the alternative development value to the landowner plus the cost of evictions. This economic logic follows, since squatters would outbid any competing use of the land if indeed they valued it more. Thus, any policy that gave more property rights to squatters would be a pure transfer from landowners to squatters. Social welfare would be unaffected. However, transaction and bargaining costs associated with the transfer of ownership of land to squatters, which are likely to be important in the squatting problem, can invalidate this simple intuition.2 Landowners incur costs when they try to enforce property rights either by collecting rent or evicting. Collect- ing rent formalizes the relationship between renter and landowner. The land- owner would then have to incur the costs of providing basic services (water

A model formalizing the theory of property rights

The paper constructs an equilibrium model that formalizes a tradeoff between the gains from trade based on increasing returns to specialization and the costs involved in specifying and enforcing property rights. The model is used to investigate the effect of differing economies of specialization, and differing efficiency in specifying and enforcing property rights, on the level of division of labor, productivity, the number of markets in existence, and the efficient degree of vagueness of property rights.

The Spontaneous Evolution of Commercial Law

Jeremy Bentham contended that property and state-made law born and must die together. Before the [state's] law there was no property: take away the law, all property ceases [4,309]. Most economists have taken this argument to heart. Clearly, some system of defining and then protecting and enforcing property rights (property law) and rules of exchange (contract law) is needed for a market system to develop. But does the state have to develop and enforce property and contract law? One purpose of the following presentation is to demonstrate that the commercial sector is completely capable of establishing and enforcing its own laws. A second purpose is to illustrate that modern commercial law is, in fact, largely made by the merchant community despite governmental efforts to take over provision of such law. Commerce is an evolving process of interaction and reciprocity which is simultaneously facilitated by and leads to an evolving system of commercial law. Carl Menger [17] proposed that the origin, formulation and the ultimate process of all social institutions including law is essentially the same as the Adam Smith [20] described for markets. Markets guided by Smith's invisible hand coordinate interactions, and so does customary law [6; 7]. These systems develop because, perhaps through a process of trial and error, it is found that the actions they are intended to coordinate are performed more effectively under one institutional arrangement or process than under another. The more effective institutions and practices replace the less effective. In the case of customary commercial law, traditions and practice evolve to produce the observed spontaneous order. As Hayek explained, however, while Smith's and Menger's insights are firmly established in economics, the study of jurisprudence has been almost completely unaffected by their arguments [9, 101]. One reason, of course, is that the invisible hand explanation for the emergence of market order is highly plausible because there is an obvious mechanism-the mechanics of individual but interrelated market prices-which provides the necessary coordination we call the price system. The mechanism of evolution for a legal order is much less obvious. Thus, the legal positivist view, which holds that law is the product of deliberate design, has a strong following among economists. Another major purpose of this discussion of commercial law, therefore, is to demonstrate that the rules of property and contract necessary for a market economy, which most economists and legal scholars feel must be imposed, have evolved without the

How the West Grew Rich: The Economic Transformation of the Industrial World by Nathan Rosenberg, L. E. Birdzell, Jr, and: The Age of Manufactures 1700–1820: Industry, Innovation and Work in Britain by Maxine Berg

962 Book Reviews TECHNOLOGY AND CULTURE How the West Grew Rich: The Economic Transformation of the Industrial World. By Nathan Rosenberg and L. E. Birdzell, Jr. New York: Basic Books, 1986. Pp. xiv + 353; notes, index. $19.95 (cloth); $10.95 (paper). The Age of Manufactures 1700—1820: Industry, Innovation and Work in Britain. By Maxine Berg. New York: Oxford University Press, 1986. Pp· 378; illustrations, tables, notes, bibliography, index. $10.95 (paper). A century after Arnold Toynbee coined the term, there is still no compelling scholarly explanation of the causes of the Industrial Rev­ olution. Nathan Rosenberg and L. E. Birdzell, Jr., posit a plausible answer. Like most such answers, theirs relies on metaphor. Technology provided the “lever,” while “some familiar Western institutions pro­ vided the fulcrum.” Those institutions included the law, the corpo­ ration, and the banking and credit system. Rosenberg and Birdzell are more interested in the fulcrum than the lever. They are convinced that the relative autonomy of those economic institutions from gov­ ernment intervention was the key to the West’s transformation, and they are convinced that their argument matters for the future. Con­ straints on the free exercise of economic authority by government, they warn, might well threaten the foundations of the West’s prosperity. How the West Grew Rich is a deeply conservative book. No other book in recent years marshalls the economic history of the West in defense of laissez-faire in such a sustained manner. To their credit, there are moments when the authors acknowledge evidence that does not fit. The geometric expansion of output in the West has continued in the 20th century, at the same time as government intervention in the economy has increased. This suggests, as the authors state, that other causes may be at work. Since there are no known limits to the advance of knowledge, “the growth of technology is especially appealing as an explanation of the persistence of Western economic growth” (p. 262). But it is an insight that is not elaborated. The book’s principal weakness is the lack of a sustained and cred­ itable analysis of the benefits of government economic intervention. In the American case, this was not simply a matter of regulating trade, enforcing property rights, and educating a work force. This the au­ thors mention. The government, at federal, state, and local levels, provided private industry with land and capital in the 19th century. State governments subsidized canals, granted public rights to private corporations, and funded banks. In this century, the government con­ tinues as a major source of research and development funds and of the costs of transportation improvement. In addition, government regulation of the marketplace has had clear benefits to some sectors of business. No convincing explanations of the West’s economic success can be constructed by posing such a sharp distinction between the TECHNOLOGY AND CULTURE Book Reviews 963 government and the economy, nor by neglecting the benefits that private enterprise derived from government. The authors’ ideological biases are most apparent in their treatment of labor. The response of that small number of middle-class reformers who sought to remedy the evident abuses of the factory system was, according to the authors, a form of “social pathology.” After viewing the poor for generations simply as objects of charity, such reformers saw the factory system as evil rather than as a “significant social ad­ vance.” This, Rosenberg and Birdzell claim, was pathological. Artisans who saw themselves as victims of new and unfair competition “ab­ surdly caricatured” reality. They were, the authors tell us, “monop­ olists at long last caught up with.” The increased length of the working day reflects, not exploitation, but the improved diet of workers and is thus an indication of “improved worker welfare.” Those seeking a balanced account of the costs and benefits of the Industrial Revolution will not find it here. What they will find is an extended interpretive essay attempting to synthesize a vast and growing literature. The authors range from the Middle Ages to the growth of science-based industry. Rosenberg is a prominent economist and historian of technology and on several im­ portant issues he has useful things to say. But...

Enforcement of property rights and the provision of public good attributes

The extant economic literature on intellectual property fails to adequately consider the effects of changes in copying costs. Some works have examined the valuation effects of copying while others only consider copying effects. The analysis presented here integrates the copying effects and valuation effects into a single framework. This approach leads to richer predictions, suggests that earlier statements about changes in social welfare from increased copying costs may be misleading, and reveals appropriate methods for empirical research. Evidence from academic journals supports the position that this general approach is needed to understand the effects of changing copying costs.

Market Reform and Collective Action in China

Although it is universally agreed that socialist political economy fails to satisfy the demand for private goods, it is often assumed that socialist states are superior providers of public goods by virtue of the public ownership of property and appeals to altruistic impulses. This article reviews social choice and game theoretic approaches to collective action, and concludes to the contrary that in China such institutions have been counterproductive. By contrast, it is argued that the self-interested, market-oriented reforms introduced since the death of Mao can actually enhance collective action, provided that the regime assures social stability and the enforcement of property rights.

The Formation and Protection of Property Rights among the Southern Kwakiutl Indians

THIS essay is about economics, anthropology, and law. I use the historical context of the Southern Kwakiutl (kwaikd[y]uid'l) Indians following contact with European civilization to test the relevance of economic theory to primitive societies. When recorded contact with the Southern Kwakiutl was first made along the north Pacific coast of North America, they were found to have established a curious reciprocal exchange system called potlatching. Since that time, potlatching has received considerable attention from ethnographers and anthropologists but virtually none from economists. I argue in this essay that the Southern Kwakiutl Indians used the potlatch system to maintain exclusive property rights in their most important capital asset and main source of wealth, the salmon fishery. In so doing, I demonstrate that recognizing the structure of property rights as endogenous-that is, at the discretion of the participants greatly enhances our understanding of primitive societies. In general, economic theory has a great deal of power in explaining the institutions and behavior of primitive man. The Kwakiutl potlatch has been described as "the ostentatious and dramatic distribution of property by the holder of a fixed, ranked and

Fact and Fiction in the Public Data Budget Crunch

Statistical information produced by governmental agencies is an example of a public good. This is true whether one defines a public good in terms of nonexclusivity (cost of enforcing property rights), Samuelsonian nonrivalry (consumption by one person does not reduce the good's availability to others), or Tullock's emphasis on economies of scale (Tullock, chap. 9). Thus, there is ample theoretical rationale for potentially welfare-improving governmental action in the generation, although perhaps not the distribution, of statistical data. And the several federal statis-

Equilibrium and efficiency under pure entitlement systems

Two types of answer have been given to the question of how should contribute to the happiness of its citizens. One is that it should take a direct (and perhaps coercive) role in the pursuit of optimality or efficiency. The other is that it should indirectly promote voluntary cooperation among its citizens by providing procedural justice to them (e.g., enforcement of property rights). This paper addresses the question of how cooperative equilibria of a government (one which guarantees rights but which does not make direct allocative decisions) would compare with social states which are Pareto efficient for its citizens. Specifically it examines whether or not such a would be unbiased (i.e., whether every Pareto-efficient social state would be possible to support as a cooperative equilibrium) in an environment where its citizens might impose externalities on one another. Unbiasedness of equilibrium could be interpreted to mean that under ideal circumstances (i.e., that cooperative outcomes would in fact be achieved) a minimal would be procedurally fair. However, unbiasedness would also imply that such a could not guarantee an egalitarian distribution of wealth, or any other feature except Pareto efficiency, in an equilibrium social state.

A Contractarian Theory of Property Rights and Crime

As was noted long ago, war-like distributional squabbles which divert resources from socially productive uses will persist in a world without government. In this paper, we show that all agents can gain ex ante from the institution of a social contract which establishes property rights and levies a tax in order to finance a criminal justice system where punishment is threatened for violations of property rights. These ex ante gains hold even for individuals who may be harshly punished ex post. The optimal social contract (i.e. the optimal level of enforcement of property rights) is also characterized.

Agency Costs and the Assignment of Property Rights: The Case of Southwestern Indian Reservations

Following Coase's 1960 article much of the literature on property rights has focused on the common property problem and the emergence of ownership institutions in response to it [5; 7; 8; 11; 13; 24; 41]. In that literature property rights are seen as developing endogenously as soon as total benefits exceed total costs. For example, in the empirical cases discussed by Libecap [24] and Umbeck [41] miners contracted informally among themselves to capture efficiency gains resulting from a secure rights structure. The informal miners' agreements were later formally codified into law as resource values rose. This smooth progression from an informal to a formal rights structure assumes that the government accepts the prior land claims. If it does not and attempts to forceably redistribute property in setting up a formal structure, the resulting conflict will both delay and affect the nature of the rights system which finally emerges. Uncompensated redistribution in the assignment of formal property rights, then, leads to higher transaction and political costs in implementing the new structure. Transaction costs include the expense of assigning, recording, and enforcing property rights and in arbitrating disputes over them. A group which challenges the new rights institution is likely to drive up enforcement and arbitration expenditures by the government, and the discord may be significant enough to hinder or prevent a secure property rights system form emerging. Political costs affect the governmental agency or bureau which is imposing the new structure. They are defined as unfavorable publicity regarding the bureau's performance that could lead to uncertainty regarding its future budget and staffing or force a change from the policy preferred by the bureau's members. Niskanen [30; 31] Tullock [39; 40], and others have discussed bureaucratic behavior by focusing upon individual goals and decision-making within

LEGISLATING COMMONS: THE NAVAJO TRIBAL COUNCIL AND THE NAVAJO RANGE

The article argues that chronic overgrazing on the Navajo Reservation is the result of policies of the BIA and the Tribal Council. In support of that hypothesis the paper outlines the nature of property rights to grazing land on the Reservation. It shows that BIA and Tribal Council actions have led to the proliferation of small herds since 1933. Small herds increase the resource costs of establishing and enforcing property rights, and they increase the political costs of requiring compliance with grazing rules. Statistical tests reveal a close relationship between herd size and overstocking of the range. The paper concludes that in the absence of the constraints of a private property system, it may be necessary for an outside agency to regulate grazing to avoid the problem of the Commons.

The Evolution of Property Rights: A Study of the American West

The Evolution of Property Rights: A Study of the American West

The Enforcement of Property Rights in Children, and the Marriage Contract

The Enforcement of Property Rights in Children, and the Marriage Contract

The Exchange and Enforcement of Property Rights

The Exchange and Enforcement of Property Rights