Structure Of Property Rights Research Articles

Coase and the Kirznerians

I interpret the theory of entrepreneurial discovery from the perspective of the theory of property rights. I analyze pure entrepreneurial profit and the logical construction of the theory as an extension of neo-classical microeconomic analysis and I argue that the key motivation for entrepreneurial discovery, the opportunity to discover pure entrepreneurial profit, is given by the structure of property rights. The structure of property rights determines entrepreneurial claims for pure profit, the level of protection against conflict of interest, costs of exclusive production means and social order.

Spatial transferring of ecosystem services and property rights allocation of ecological compensation

Ecological compensation is an important means to maintain the sustainability and stability of ecosystem services. The property rights analysis of ecosystem services is indispensable when we implement ecological compensation. In this paper, ecosystem services are evaluated via spatial transferring and property rights analysis. Take the Millennium Ecosystem Assessment (MA) as an example, we attempt to classify the spatial structure of 31 categories of ecosystem services into four dimensions, i.e., local, regional, national and global ones, and divide the property rights structure into three types, i.e., private property rights, common property rights and state-owned property rights. Through the case study of forestry, farming industry, drainage area, development of mineral resources, nature reserves, functional areas, agricultural land expropriation, and international cooperation on ecological compensation, the feasible ecological compensation mechanism is illustrated under the spatial structure and property rights structure of the concerned ecosystem services. For private property rights, the ecological compensation mode mainly depends on the market mechanism. If the initial common property rights are “hidden,” the implementation of ecological compensation mainly relies on the quota market transactions and the state investment under the state-owned property rights, and the fairness of property rights is thereby guaranteed through central administration.

Institutions and investment efficiency: An empirical investigation

New Institutional Economics has revived the important role of institutions
 on economic growth. North (1990) was a pioneering work. Institutions are defined as ‘the humanly devised constraints that structure human interaction. They are made up of formal constraints (for example, rules,
 laws, constitutions), informal constraints (for example, norms of behaviour, conventions, self-imposed codes of conduct), and their enforcement characteristics’ (North 1994, p. 360). Formal institutions are constraints
 sanctioned by state power if individuals violate them, while informal institutions are self-imposing constraints. According to North, of primary importance to economic performance is the economic institutions that
 determine transaction costs and influence the incentive structure in society such as the structure of property rights and the presence and perfection of markets. 
 There are now various empirical studies on the effect of institutions on economic growth. Most studies used crosscountry regressions to determine the effect of institutional quality on economic growth. Knack and Keefer (1995) was a pioneering work. Four important institutional variables were proposed by Knack and Keefer (1995): protection of property rights, rule of law, corruption and bureaucratic quality. Such
 data were compiled from International Country Risk Guide (ICRG) data, published by the U.S.-based Political Risk Services Group, and from Business Environment Risk Intelligence (BERI), based in Switzerland. The ICRG index includes protection of property rights (expropriation risk and repudiation of contracts by government), rule of law, corruption, and bureaucratic quality. The BERI index includes contract enforceability, nationalisation potential, bureaucratic delays and infrastructure quality. Knack and Keefer run a regression vfor 97 countries in the period 1974-89. The explanatory variables include institutional quality (ICRG or BERI), initial per capita GDP, initial human capital, average annual government consumption share/GDP, distortion index (absolute value of deviation of investment price level), the number of revolutions and coups per year and the number of political assassinations per year per million population in the period 1974-89. To avoid possible simultaneity between growth and institutional quality, the authors chose the initial value of the institutional
 indices rather than the average for the whole period. The earliest release of BERI was 1974 and that of ICRG 1982. The scale for BERI was from 0 to 4 and for ICRG from 0 to 10 (the higher the better). The findings indicated that the ICRG index was positive and highly significant across the specifications. The BERI index was positive and significant for most specifications. Mauro (1995) used a different dataset of institutions from Business International (later incorporated into the Economist Intelligence Unit). His institutional variables included corruption and bureaucratic efficiency (including corruption, efficiency of the judiciary system, and bureaucratic red tape). The data were collected for the period 1980-83. The dependent variable
 was average per capita GDP growth during 1960-85. The explanatory variables included initial per capita income in 1960, population
 growth, primary education in 1960, government expenditure share, revolutions and coups, assassinations, political instability, two distortion indices (absolute value of deviation of investment price level and its standard deviation), dummies for regions, and Mauro’s corruption index or
 bureaucratic efficiency index. The finding was that both low bureaucratic efficiency and high corruption exerted strong and negative effects on growth. Their effects were statistically significant. Other significant studies include Sachs and Warner (1997a, 1997b), Barro (1998), Brunetti et al. (1997), Kaufman et al. (1999b), Aron (2000). Their findings in general indicate
 positive effects of institutional quality on economic growth.
 This paper is aimed to explore a different but relevant relationship, i.e.,
 the question is how institutions affect on efficiency of investment. The efficiency of investment is defined as the incremental capital-output ratio (ICOR). The ICOR measures the additional amount of capital required to produce an additional unit of output. The reciprocal of ICOR measures
 the productivity of additional capital (Gillis et al. 1992). The efficiency of investment is vital to growth because the level of investment alone cannot fully explain growth performance across countries. It is noteworthy that some countries can achieve a fairly high investment rate, but only slow growth. For example, during the period 1961-85, Argentina, Jamaica and
 Zambia achieved an investment/GDP rate as high as that of Taiwan, Malaysia and Thailand, but could only achieve a growth rate less than a third of the latter group. The main hypothesis of this paper is that quality of institutions has positive effect on investment efficiency.

The Oil and Gas Industry and the Niger Delta: Implications for the Environment

The causes of environmental degradation and biodiversity depletion arising from the activities of the oil industry in the region are evaluated. The authors argue that, specific negative impact on the region arising from the activities of the industries include: environmental pollution, biodiversity depletion, social destabilization, underdevelopment of host communities, global warming and associated elevated flood risk Furthermore, a direct consequence of property rights structure following from existing legislature is the underdevelopment of host communities in spite of huge national earnings from oil and gas since 1970. The authors concluded by favouring all embracing and genuine stakeholders participation in environmental and developmental issues in the region

Fragile Social Norms: (un) Sustainable Exploration of Forest Products

The exhaustion of natural resources is a central problem in the international agenda. The particular case of Amazon forest is at the top on the international environmental debate. Two related problems are keys to be considered in the discussion of sustainable development in this region. First the predatory use of the natural resources of the forest mainly timber and genetic resources. Second the recognition of the existence of a population of around 20 million inhabitants in the region defined as “Legal Amazon Area”, aiming the improvement on the living conditions, enhancement of income level and acceleration of development. How to match both objectives is a puzzle faced by the present generation. The region is populated by initiatives of international non-governmental-organizations, most of them carrying good intentions but lacking the necessary knowledge on local formal and informal institutions to find ways to reach sustainable development. The result is the accelerated process of natural resources depletion, and social disorganization. The case of the production of Brazilian Nuts stands as a corollary of the lack of an institutional structure of property rights that does not provide incentives for sustainable development. The opposite effect is being observed as a result of the fragility of observable institutional arrangements. The case provides the counterfactual for the analysis of Ostrom (1990; 2008), where she presents virtuous cases of sustainable exploration of natural resources, mostly based on informal but solid institutions.

A Reserva legal florestal diante do novo direito de propriedade: análise da Constitucionalidade do projeto de lei Nº 143/2009 do Estado do Paraná

This work aims to study the legal forest reserve through the prism of the new property rights enshrined in the federal constitution of 1988 once exists in Paraná the law project nº. 143/2009 which aims to compensate finacially the Paraná landowner that comply with the quota of legal reserve in your property. Thus, it was analyzed the new structure of property rights enshrined in the federal constitution of 1988 observing their social and environmental function, basing the existence of certain administrative limitations of an environmental nature. Therefore it was proved that the legal reserve is the administrative limation to the property right based on their environmental function and, in this way, it is free, becoming a generic obligation to the landowner, just by being landowner. Thus, it concludes the unconstitutionality of project 143/2009 observing the incompatibility with the constitutional provisions that provide the existence of social-environmental function of property as a duty imposed on the owner, which legitimizes the institute of legal reserve as an administrative restriction on the right of property and should be free.

A Reserva legal florestal diante do novo direito de propriedade: análise da Constitucionalidade do projeto de lei Nº 143/2009 do Estado do Paraná

O presente trabalho tem por fim o estudo da Reserva Legal Florestal diante do novo direito de propriedade consagrado pela Constituição Federal de 1988, vez que há, no Estado do Paraná, Projeto de Lei Estadual nº 143/2009 que pretende compensar financeiramente o proprietário rural paranaense que cumprir com a cota de Reserva Legal em seu imóvel. Assim, analisou-se a nova estrutura do direito de propriedade consagrado pela Constituição Federal de 1988, tendo-se em vista a sua função socioambiental, ali preceituada como inerente a tal direito, fundamentando a existência de certas limitações administrativas de caráter ambiental. Dessa forma provou-se que a Reserva Legal é limitação administrativa ao direito de propriedade fundamentada em sua função socioambiental e, por assim ser, é gratuita, configurando-se em obrigação imposta ao proprietário rural de maneira genérica, simplesmente por esse figurar como tal. Com isso, conclui-se pela inconstitucionalidade do Projeto de Lei nº 143/2009, tendo em vista sua incompatibilidade com os dispositivos constitucionais que prevêem a existência da função socioambiental da propriedade como um dever imposto ao proprietário, a qual legitima o instituto da Reserva Legal como limitação administrativa ao direito de propriedade, devendo ser, portanto, gratuita.

Rechtsstruktur und Evolution von Wirtschaftssystemen – Pfadabhängigkeit in Richtung Zentralisierung? / The Structure of Property Rights and the Evolution of Economic Systems – Path Independences leading into Centralization

Zusammenfassung Die nach dem Zusammenbruch der Zentralverwaltungswirtschaften sozialistischen Typs zu erwartende Weiterentwicklung dezentralisierter Systeme blieb aus. Vielmehr durchlaufen ursprünglich tendenziell handlungsrechtlich dezentralisierte Systeme derzeit einen schleichenden Zentralisierungsprozess, der mit einer zunehmenden Kollektivierung ursprünglichen Individualeigentums einhergeht. In diesem Papier werden zum einen die Hintergründe und Triebkräfte der zunehmenden Zentralisierung, die dem polit- ökonomischen Bereich zuzuordnen sind, verdeutlicht. Zum anderen werden unter besonderer Berücksichtigung der eigentumsrechtlichen Struktur Ansatzpunkte entwickelt, die eine Durchbrechung der Zentralisierungstendenzen ermöglichen und den Weg zurück in Richtung Dezentralisierung öffnen könnten.

On Adverse Selection of Technologies

This paper discusses the interrelation between the choice of technology and rent seeking. First, the players have to decide on the purchase of a technology. If the technology is acquired, realized profits are distributed via a rent-seeking contest. I can show that players will reject profitable technologies (adverse selection) or underinvest, if they anticipate excessive rent seeking. The results are applied to the empirical findings on differences in income and total factor productivity across countries. These findings can be explained if developing countries are more prone to rent seeking than industrial ones due to their less stable property-rights structures.

Property rights, politics and innovation: creamery diffusion in pre-1914 Ireland

This article examines the impact of endowments, property rights and political conflict on the diffusion of cream separators in late nineteenthcentury Ireland. Favourable endowments, access to finance and owner-occupancy promoted the spread of cream separators, while in areas with more small farms political conflict slowed down the diffusion of separators as well as of cooperatives. The structure of property rights and political conflict help explain why Irish agriculture was less successful than Danish agriculture during this period.

Sustainable development and institutional change: evidence from the Tiogo Forest in Burkina Faso

AbstractThe management of forest resources in developing countries is often inefficient and this is particularly the case when forests are a public good managed by the state. These inefficiencies are generally the result of both externalities and free‐riding behaviour. The solution usually considered is to change the property rights structure of the resource, that is, privatisation of forests. It appears, however, that privatisation also has inefficiencies of its own, particularly when it is imposed on local populations. The aim of our contribution is to go beyond the usual state management versus privatisation debate, and to propose instead a property rights structure and related co‐ordination scheme which take into account the specific institutional circumstances of the economic setting in which the natural resources are being exploited. The purpose is to suggest solutions based on the need to attain coherence between the external institutional structure and the behaviour of local players. In others words, the challenge is to establish the conditions necessary for an induced—rather than imposed—institutional change. A property rights structure of a resource must consequently be analysed from two perspectives. The first, and more traditional one, sees property rights as an efficient institutional structure of production enabling a reduction in transaction costs. The second proposes to evaluate any given property rights structure from the standpoint of its ability to offer a solution to the issue of an effective link between the legal framework and the behaviour of the players. Our analysis will make use of our knowledge of the forest of Tiogo in Burkina Faso based on a survey organised in 12 riverside villages, and using a sample of 300 households. The case of the Tiogo Forest suggests that institutional change needs to follow an incremental and path‐dependent process within which the state is invited to play a major role together with the local communities. Indeed the institutional choices of the Tiogo Forest households indicate that they favour an inclusion of the local population in resource management and co‐administration of forestry resources with the state. Such an institutional structure favours a negotiated rather than an imposed scheduling of measures, and seeks a minimum of consensus to ensure the adhesion of actors and users to the new institutional arrangements, whilst limiting the number of bad players. Copyright © 2007 John Wiley & Sons, Ltd.

On the Role of Capital in “Capitalist” and in Labor-Managed Firms

This article outlines the “fundamental myth” about the structure of property rights in a capitalist economy, namely the idea that being the residual claimant in a productive opportunity is part of a bundle of property rights known as the “ownership of the firm.” Residual claimancy is contractually determined so there is no such “ownership.” The fundamental myth exposes a basic fallacy in capital theory that has hitherto escaped attention in the capital theory debates.

ECONOMIC EFFECTIVENESS IN TERMS OF THE ECONOMIC THEORY OF PROPERTY RIGHTS - SELECTED ISSUES

This article shows some issues of an institutional, economic theory of property rights. The principles and the basic concepts of this theory are presented in the paper. The fragmentation of absolute property rights, the implications of the Coase theorem and the private and public property issues are refined. All analysed questions are described regarding an influence of the institutional structure of property rights on the efficiency of the chosen economic processes.

New Strategies for Structuring Society from a Cash-flow Paradigm

A system of economic analysis based on cash-flows rather than profit is presented as a basis for integrating the economic values obtained from tenure (ownership, control or use of assets) with the values obtained from production and exchange of goods and services. The paper indicates how the integration of tenure and trade values provides a basis for analysing and designing institutional structures to create a more efficient, equitable and self-correcting economic system. A feature of the paradigm is that the structure of property rights, governance and money can become a variable, subject to analysis, rather than a feature which is assumed constant and so omitted from evaluation. Markets are identified as one of four different communication and control mechanisms of social integration. The other three being hierarchies (command), symbolic (semiotic) and the natural senses. The contribution of each of the four mechanisms is considered to compare various types of societies from those existing over 10,000 years ago to current forms of capitalism and socialism. The paper argues that to create a self-correcting, ecological, sustainable society, the structure of property rights, governance and money would need to follow the dynamic feed-back control architecture found in living things and be guided by the characteristics of the host bio-region. This would create a Third Way and a more democratic form of capitalism. To follow the example of nature, the perpetual, monopoly and static rights to property and money would need to be replaced with time limited, competing, and dynamic rights. Corporate bodies would then obtain the attributes of living organisms with all users and/or stakeholders of all types of property obtaining appropriate ownership and control entitlements. This would result in multinational corporations and central banks being replaced with many decentralised locally owned and controlled competing institutions. To maintain its existence, the World Bank would need to change its role from distributing credit to educating communities how to build and manage their own local banking and currency systems based on ecological principles.

Latin American Law: A History of Private Law and Institutions in Spanish America

Latin American Law: A History of Private Law and Institutions in Spanish America

Property Rights for Biodiversity Conservation and Development: Extractive Reserves in the Brazilian Amazon

Many of the world's most valuable biodiverse areas are successfully managed by indigenous communities, often under peculiar property rights structures. In many cases, these communities are economically disadvantaged, even by local standards. But can particular local property rights regimes which are ecologically successful also allow communities to compete productively in market economies? The extractive reserves of the Brazilian Amazon offer an opportunity for investigating the connections between property rights, conservation and development in the context of tropical forests. This article aims to analyse whether the existing property rights in these reserves — an idiosyncratic mixture of public, collective and private property rights — can support the explicit development aim of a competitive, yet sustainable, exploitation of the area's natural resources. The analysis identifies three promising development paths open to extractive reserves, but points to a fundamental contradiction between the static structure of the property rights system and the dynamic nature of two of these paths. The current design of internal property rights fails to take into account the broader economic context in which reserves must generate a viable revenue stream. If extractive reserves are expected to develop without reliance on external aid, then changes to the property rights structure both inside and outside the extractive reserves have to be explicitly considered.

Effective property rights, conflict and growth

This paper shows how the interaction between conflict and growth can give rise to a nonmonotone relationship between property rights and social welfare. This interaction is illustrated in a model of endogenous growth in which equilibrium diversion of resources is the cost of securing effective property rights. A symmetric equilibrium allocation associated with more secure property rights and faster growth can be Pareto dominated by one associated with poorer property rights and slower growth. Faster growth can exacerbate the problem of diversion whenever property rights are sufficiently poor. These results call for caution before a society decides to pursue economic growth independently of the institutional structure of property rights. Furthermore, if this structure is inappropriate piecemeal reform might not be in the interest of society, and a substantial reform might be necessary if it is to be welfare-improving.

Network access charges, vertical integration, and property rights structure—experiences from the German electricity markets

After the deregulation of the German electricity markets in 1998, the German government opted for a regulatory regime called negotiated third party access, which would be subject to ex-post control by the federal cartel office. Network access charges for new competitors are based on contractual arrangements between energy producers and industrial consumers. As the electricity networks are incontestable natural monopolies, the local and regional network operators are able to set (monopolistic) charges at their own discretion, restricted only by the possible interference of the federal cartel office (Bundeskartellamt). In this paper we analyze if there is evidence for varying charging behaviour depending on the supplier's economic independence (structure of property rights) or its level of vertical integration. For this purpose, we hypothesise that incorporated and vertically integrated suppliers set different charges than independent utility companies. Multivariate estimations show a relation between network access charges and the network operator's economic independence as well as level of vertical integration: on the low voltage level for an estimated annual consumption of 1700 kW/h, vertically integrated firms set—in accordance with our hypothesis—significantly lower access charges than vertically separated suppliers, whereas incorporated network operators charge significantly higher charges compared to independent suppliers. These results could not have been confirmed for other consumptions or voltage levels.

The Role of Capital in 'Capitalist' and in Labor-Managed Firms

This paper is divided into two parts. The first part outlines the fundamental myth about the structure of property rights in a capitalist economy, namely the idea that being the residual claimant in a productive opportunity is part of a bundle of property rights known variously as ownership of the firm, ownership of the means of production, or, to economists, ownership of the production set (or function). Residual claimancy is contractually determined and there is no ownership that legally determines how future contracts are made. The fundamental myth leads to a basic fallacy in capital theory and in corporate finance theory. Understanding the myth also allows us to clarify the role of capital in the system misnamed capitalism. The underlying theme is that the key institutional feature of capitalism is not the role of capital or the private ownership of the means of production but the employment contract for the renting of human beings. In the second part, slightly more formal models are first used to analyze the fallacies in capital theory and corporate finance theory. Then attention is turned to a right-by-right comparison between the structure of rights in a conventional corporation and in a democratic firm (a labor-managed firm). Of key importance is the role of the internal capital accounts in a democratic firm.

Caring for property: comments on Susan Smith's “States, markets and an ethic of care”

This paper pursues some themes raised by Susan Smith's article, “States, markets, and an ethics of care”. Specifically, I consider the way that the complex structure of property rights – a structure that includes both the right to control and manipulate the object owned as well as to exchange it with others – makes the question of where exactly markets operate complex. I also trace out some lines of thought in Immanuel Kant's views on property to help show that the question of the separation between state institutions and market activity is often misconceived. The state, as Kant's views show, both structures and protects property rights bundles of its citizens, and hence the line between state and market is not a bright one. Rather, the question will always be how state policies structure ownership and markets not whether they do. These lines of analysis are used to further bolster Professor Smith's claims about the precarious and sometimes dangerous incursions of market thinking into areas that more often are guided by an ethic of care, and the losses that are observable in such incursions, especially regarding social spaces governed by housing policies of the sort she examines.