Institution Of Property Rights Research Articles

Appropriation, Property Rights Institutions, and International Trade

In producer-friendly economies—economies that are ruled by productive agents and have strong property rights institutions—international trade causes an institutional improvement and an aggregate shift of talent towards production, and away from socially wasteful appropriation. However, in predator-friendly economies—economies that are ruled by rent seekers and have weak institutions—international trade leads to an institutional deterioration, and a more unfavorable talent allocation. (JEL D72, F12, K11)

Property Rights Institutions and Firm Performance: A Cross-Country Analysis

This paper empirically examines the link between firms’ performance and institutional quality using data for firms in 52 countries. We control for potential endogeneity by instruments alternatively based on legal origin and “related-firm” institutions, and by a “bribery” variable. We also use two indicators of institutional quality: firms’ expectations that their contractual and property rights will be protected by the legal system, and a property rights index from The Heritage Foundation. We incorporate firm-specific characteristics including industry type and international linkages. We find significantly positive relationships between firms’ performance and perceived property rights protection independent of other observable firm characteristics.

Property and Progress

Copyright laws aim to protect intangible interests in the use of literary and artistic works to provide creators with an incentive to produce. The law rationalizes that by granting exclusive “property” rights in creative works, authors will be encouraged to produce works for the ultimate benefit of society as the potential for commercial rewards is assumed to be the primary motivation for creativity. But, the exclusive control these rights give creators and owners of copyrighted works have been the subject of severe criticism because they create access barriers to the use of content, which, free speech and civil liberties advocates, argue should be free of restrictions for civil discourse and political dialogue. This Article argues that, contrary to contemporary thought that rights in the copyright system hampers progress, the protection of individual rights in literary and artistic works - besides encouraging creativity for progress - also brings into the copyright system a normative order for social conduct that advances society towards the Constitutional goal of progress. A strong institution of property rights for the copyright system correlates with greater progress of science and arts because the recognition and protection of individual authorial autonomy instills individual and collective social responsibility in how works are used and produced, generates public respect for the act of authorship, and fosters education, research, and economic development through the production and use of literary and artistic works. The creation of diverse works will contribute towards progress of science and arts only if an underlying foundation of property rights protect the creator of a work to instill a sense of individual autonomy and responsible authorship and directs public use of the work toward socially beneficial purposes in ways that strengthen, rather than weaken, the moral fabric of society. This Article concludes that the progress of science and arts is not only dependent on a system of statutory copyright provided by the Copyright Act but on an institution of property laws to provide normative guidance on proper conduct in the production and use of literary and artistic works in ways, which would advance progress.

Land, property rights, and planning in Japan: institutional design and institutional change in land management

Although clearly a key institutional framework that structures planning systems, there has been remarkably little attention by planning historians to the comparative study of institutions of property rights in land as a factor shaping approaches to urban planning. Conversely, planning has clearly functioned as a key site of institutional innovation shaping the evolution of property rights. This relationship between planning and property rights deserves greater attention. Although property rights are often entrenched in written constitutions as is the case in both Japan and the USA, and do exhibit considerable continuity over time, they are in fact seldom static, being subject to evolving interpretations and constraints. This paper employs a historical institutionalist approach in the examination of the evolution of institutions of property rights in Japan during the modern period, from just before the Meiji Revolution of 1867–1868 to the early twenty‐first century. The paper shows that the strong protection of landed property rights in Japan is a product of the Meiji period, not the post‐Second World War occupation, and argues that institutional choices in framing landed property rights have multiple and varied long‐term impacts that may have little to do with the original policy goals.

Institutions and Economic Reforms

Recent studies in economic development seek to establish that institutional quality is an important determinant of long-run living standards. Moreover, it appears that property rights institutions are causal for development whereas contracting institutions affect the nature of financial intermediation in the economy. I use these results to explore two questions. If property rights institutions matter for economic growth, can they help explain large-scale reform surprises? The reforms in Western Germany in 1948 are viewed as 'miraculous' whereas those in the early 1990s in the former Soviet transition economies are viewed as disappointing. I argue that the former had a limited task because they only had to restore existing property rights institutions whereas the latter had to create new ones and find new owners for assets. The second question is whether the persistence of variety in contracting institutions across countries that have developed successfully has implications for the design of financial and corporate governance reforms.

The State Duty to Support the Poor in Kant's Doctrine of Right

Recent works of Weinrib and Ripstein argue in favour of the state duty to support the poor found in Kant's ‘Doctrine of Right’. The argument is not Kant's own, but is said to flow from the most basic precepts of that work. It is, roughly, the following: because the institution of property rights can lead to the situation whereby, there being nothing left to appropriate, persons could become dependent upon others for their very existence, the validity of property rights (and private rights in general) in the civil condition depends upon the state's supporting the poor so as to ensure that such relations of dependence do not arise. This article argues that this welfarist state duty is incompatible with the structure of the Doctrine of Right, and independently implausible.

Enlightened Localism in Contemporary China: Political Change in Property-Rights Institutions of Township and Village Enterprises

AbstractI examine the dynamic and interactive relationships between local governments and local economic elites as they attempted to privatize China’s township and village enterprises (TVEs) in the late 1990s. To pursue financial interests shared with the local economic elite, local governments informally privatized public TVEs and thereby compromised their role as political agents of the central government. This institutional change in property rights demonstrates a Chinese pattern of “enlightened localism” (Gregg 2003) by which the local political and economic actors develop a pragmatic way of coping with ambiguous legal issues. The deployment of enlightened localism in the TVE sector shows that China’s policies of economic decentralization unintentionally have led to a decentralization of political control.

Property rights conflict, customary institutions and the state: the case of agro-pastoralists in Mieso district, eastern Ethiopia

ABSTRACTThis paper examines inter-ethnic conflict over grazing land previously accessed as common property. It presents results of a study undertaken in Mieso district of eastern Ethiopia where two ethnic groups maintain different production systems – pastoral and agropastoral. The historical change in land use by one of the ethnic groups, resource scarcity, violation of customary norms, power asymmetry and livestock raids are among the factors that have contributed to the recurrence of conflict. Particularly important is the role of raids in triggering conflict and restricting access to grazing areas. Socio-economic and political factors are responsible for power asymmetry and the increasing scale of raids. An increase in the frequency of violence and a decline in the capacity of customary authority in conflict management advance the role of the state in establishing enforceable property rights institutions. This will succeed only if policies and interventions are redirected at suppressing incentives for violence, establishing new institutional structures in consultation with clan elders of both parties, and building internal capacity to monitor conflict-triggering events.

Cooperation when N is large: Evidence from the mining camps of the American West

The sources of cooperation in small groups are well documented. There is, however, less understanding about cooperation in large groups. I study the enforcement of property rights in the mining camps of the American West. Miners demanded secure property rights and protection from violence to exploit the region's mineral wealth. In the model, miners must divide their labor between mining and supporting property rights institutions. The main prediction of the model is that cooperation in property rights enforcement emerges only when social norms of cooperation are sufficiently widespread. The model also predicts that social norms are less effective in mining camps with large populations or high labor productivity. I test these predictions against detailed evidence from the letters, diaries, and reminiscences of miners in 25 camps in California, Colorado, and Montana and find that the evidence supports the predictions. The results show that social norms can significantly lower the costs of collective action in large groups.

Institutions, incentives, and disaster relief

PurposeThe purpose of this paper is to highlight the importance of property rights institutions to disaster relief efforts, with a focus on the US Federal Emergency Management Agency in the aftermath of Hurricane Katrina in New Orleans, Louisiana.Design/methodology/approachThe paper utilizes public choice, Austrian, and new institutional analyses of bureaucracy. It discusses private and public sector responses to the situation in New Orleans following Katrina and to disasters in general, and compares the institutional frameworks that develop over time in both sectors.FindingsThe paper finds that a large and bureaucratized response to disasters hinders economic calculation, incentive structure, and property rights institutions, all of which are crucial for rapid disaster response, the relief of human suffering, the minimization of knowledge problems, and the promotion of an efficient allocation of resources.Practical implicationsThis research suggests that the role of the price system in allocating resources is especially important following disasters and that in order to ensure relief efforts are as efficient as possible, public‐sector actors should do nothing to impede them. It also suggests that the incentives to prepare an efficient emergency preparedness program are greater when those most affected by potential disasters are held responsible for their implementation.Originality/valueThe paper provides a critical evaluation of the role of highly centralized approaches to disaster relief.

DISORDER WITH LAW: A PRELIMINARY STUDY OF VIOLENCE IN RESPONSE TO WATER RIGHTS VIOLATION IN COLONIAL NEW SOUTH WALES

Scholars argue that violence will not occur in the presence of efficient property rights institutions. Empirical evidence from the Riverina district in New South Wales between 1855 and 1870 contradicts this claim. This paper provides a preliminary analysis of evidence to explain this apparent inconsistency. Violence was directed at upstream users who dammed rivers, preventing flow to downstream users. Evidence suggests violence was a form of social control referred to as self‐help employed to enforce conventions of fairness. Dams were perceived as unfair because they reduced the distributive equity embodied in the common law of riparian rights that established water‐use rules to allocate water between competing users. Violence in the form of dam destruction occurred primarily during drought years and was the preferred over common law remedies because of the lag time between seeking court intervention and obtaining a remedy. Coasean bargaining was not possible because of high transaction costs. The findings suggest that violence may occur in the presence of efficient property rights institutions if actors violate conventions of fairness. Violence may be more likely if property rights themselves embody these conventions.

Prosperity without conflict

Social conflict and slow growth are features of many developing economies. This paper considers the role institutions of property rights and conflict management can play in both achieving prosperity and mitigating conflict in these economies. We study how introducing conflict over economic distribution into an otherwise standard model of growth can shape optimal (second-best) taxation policy when diversionary activities cannot be taxed. In this context, we find that the maximization of economic efficiency may call for a reduction in growth in order to mitigate the problem of diversion, even though the economy's growth is inefficiently slow in the absence of taxation. This is so when institutional quality is sufficiently poor, but not otherwise. The paper warns against the conventional justification of growth-promoting policies on efficiency grounds independently of institutions.

Western Imperialism and Defensive Underdevelopment of Property Rights Institutions in Siam

Thailand and Japan both faced the threat of colonialism in the latter half of the nineteenth century. While geopolitical vulnerabilities provided Japan with a critical impetus for defensive modernization, they compelled the Siamese state to pursue a strategy of defensive underdevelopment. To understand this paradox, the article explores how variations in the “unequal treaties” imposed on Japan and Siam by Western powers shaped state interests in a policy area of vital importance to the two countries' predominantly agricultural economies: the rural land rights regime.

Reparations, Once Again

Reparations whether to blacks for slavery, or to Indians for land theft, or to settle any number of other conflicts, has an interesting political background. Analysts on the left, who are usually no friend of private property rights, nevertheless rely on this doctrine to support their case for reparations. Those on the right, in contrast, who supposedly defend the institution of property rights, jettison them when it comes to reparations. It is only libertarians, such as the present authors, who both favor private property rights in general, and, also, apply them to the issue of reparations, who are logically consistent.

Domestic Institutions and the Bypass Effect of Financial Globalization

This paper proposes a simple model to study the relationship between domestic institutions - financial system, corporate governance, and property rights protection - and patterns of international capital flows. It studies conditions under which financial globalization can be a substitute for reforms of domestic financial system. Inefficient financial system and poor corporate governance in a country may be completely bypassed by two-way capital flows in which domestic savings leave the country in the form of financial capital outflows but domestic investment takes place via inward foreign direct investment. While financial globalization always improves the welfare of a developed country with a good financial system, its effect is ambiguous for a developing country with an inefficient financial sector/poor corporate governance. However, the net effect for a developing country is more likely to be positive, the stronger its property rights protection. This is consistent with the observation that developed countries are often more enthusiastic about capital account liberalization around the world than many developing countries. A noteworthy feature of this theory is that financial and property rights institutions can have different effects on capital flows.

Domestic Institutions and the Bypass Effect of Financial Globalization

This paper proposes a simple model to study how domestic institutions affect patterns of international capital flows. Inefficient financial system, and poor corporate governance, may be bypassed by two-way capital flows in which domestic savings leave the country in the form of financial capital outflows but domestic investment takes place via inward FDI. While financial globalization always improves the welfare of a developed country with a good financial system, its effect is ambiguous for a developing country with an inefficient financial sector or poor corporate governance. Interestingly, financial and property rights institutions can have opposite effects on capital flows. (JEL D02, E21, F21, F32, G34)

Institutions, Trade and the Political Economy of Financial Development

To study how financial development depends on trade openness and different types of institutions, we present a political economy model in which the elite can repress the financial market at some cost. The elite can persuade the government to set an interest rate ceiling, and it can then channel all capital supplied toward itself. It can thereby keep its capital costs low and limit the domestic production of modern goods by ensuring that ordinary citizens cannot get sufficient capital to produce these goods. The latter raises the prices of modern goods under autarky, but not under free trade. For most world market prices, greater trade openness therefore reduces the elite's incentive to repress the financial market and increases financial development. Better property rights institutions make financial repression more costly for the elite and tend therefore to increase financial development. Better contracting institutions lower the costs of financial transactions, which has countervailing effects on equilibrium financial development. These predictions are consistent with the empirical evidence.

The Importance of Property Rights to Development

This article explores the difference that the institution of property rights has made to the economic and political life of developed countries and the promise it holds for developing countries. By shaping the incentives of individuals and undergirding the institutions of society, a strong property rights regime lays the foundation for growth, freedom, and overall well-being. For individuals, property ownership entails opportunity, responsibility, and economic freedom. For society, these translate into investment, innovation, the possibility of widescale exchange, and even improved governance.

Interlocked use of inland fish resources: a new management strategy under private property rights

Abstract Interlocked use of multiple inland vendace, Coregonus albula (L.), stocks is a relatively new strategy to exploit asynchronous fluctuations in abundance of natural fish stocks between waterbodies. It combines vendace stocks from different lakes or parts of lakes into one interlocked stock to be managed across waterbody ownership boundaries. Management of interlocked stocks can be regarded as one form of portfolio management. Exploitation of interlocked stocks should reduce the interannual variation in yield, and thus ensuring fishers more constant income and the market more constant material flow. The strategy requires fishers to increase their mobility, to benefit from asynchronous fluctuations in abundance of vendace stocks between exploitable waters. A postal inquire addressed to Finnish commercial inland fishers examined whether existing property rights institutions’ and fishers’ harvesting policies were appropriate to establish interlocked use of multiple vendace stocks. Almost half of fishers had, to some extent, reaped benefit from a fishing strategy that included small‐scale mobility, which is consistent with the proposed strategy. By harvesting three or four lakes and stocks, fishers increased their yield compared with exploiting one fishing ground and one vendace stock. Public ownership provided fishers access to stocks nearer their place of residence than other ownership types.

Which Institutions Matter Most for Growth

In this paper we revisit the debate over the relative contribution of different types of institutions in economic growth. We find that the existing study (Acemoglu and Johnson 2005) linking property rights institutions and contracting institutions to long-run growth suffers from identification problems. It appears that the historical instruments used to predict the contribution of history in shaping current institutions are as good a predictor of current schooling as they are for current institutions. We use GMM and control for schooling to tackle these problems. The results show that strong 'market creating institutions' characterized by the adequate protection of private property and contract enforcement are growth enhancing. The 'market stabilizing institutions' that ensures macroeconomic stability and does not undertake distortionary policies boosts investor confidence and are also good for growth. We notice that there is a growth maximizing level of 'market regulation' beyond which it increases red tape and kills the incentive for investment. The effect of 'market legitimizing institutions' is statistically insignificant.