Well-defined Property Rights Research Articles

Saving Scarce Species from Extinction through Free Enterprise

Clearly defined private property rights allow owners to calculate their profits and losses. Ownership, therefore, enables the rational allocation of scarce capital toward profitable ends. Production of biological organisms are not exceptions to economic calculation. If the present prohibitions on the mass production of rare living creatures were repealed, profit-seeking entrepreneurs might choose to mass produce so-called endangered species on a competitive market. Naturally, some of the resulting non-human, living pieces of private property might well trespass, attack, and predate on the properties of other enviropreneurs. Staving off extinctions through a free-market approach to declining biodiversity would require a new legal framework. Indeed, well-defined property rights in privately owned fauna and flora would become an essential lynchpin in the legalized market of rare animal and plant production. The author offers some starting points toward a laissez faire capitalist structure of property rights principles under the law to increase incentives toward greater production of commodifiable species.

From Countryside to City: How Land Property Rights Drive Migration in China

China’s remarkable economic surge since the 1970s hasn’t erased the pronounced economic disparities across different regions, most notably between rural and urban locales. Rooted in the historical division of land rights and usage stipulated by economic reforms, this urban-rural dichotomy has fostered varied development patterns in infrastructure, primary industries, and foreign trade and investment. At the core of this dichotomy is the contrasting landscape of land property rights—state ownership in urban areas with permissible leaseholds versus collective ownership in rural areas with restrictions on transfer or leasing. This paper investigates how these divergent land property rights regimes have engendered significant migration patterns, predominantly marked by rural to urban migration, in pursuit of better economic prospects. Through a meticulous examination of the Household Responsibility System (HRS) and subsequent agrarian reforms, this paper elucidates how partial property rights and restrictions on land transferability under HRS have had substantial repercussions on domestic migration. The analysis delineates how well-defined and secure property rights, as postulated by prominent theories of property rights, are instrumental in incentivizing migration. When operational, market mechanisms of land property rights enable farmers to lease their lands, thereby fostering migration by reducing the opportunity cost of leaving rural lands. Conversely, in the absence of robust property rights, government mechanisms often lead to forced land acquisitions sans adequate compensation, exacerbating rural-urban income disparities and propelling rural-urban migration. The paper expounds on the multifaceted implications of these migration patterns on economic opportunities, poverty alleviation, and urbanization in China. Additionally, it discusses the ripple effects of rural-urban migration on income disparity and the consequent socioeconomic repercussions. The findings shed light on the complex interrelationship between land property rights and migration, providing a nuanced understanding of China’s urbanization trajectory and its attendant rural-urban disparities. This analysis offers valuable insights for policy formulations aimed at addressing the systemic issues arising from the entrenched land property rights framework, and suggests a pathway towards a more balanced regional economic development and sustainable urbanization in China.

Peasants' land rights and the hollowing out of communal property management in rural China

In recent years, China has strengthened the land rights of peasants while weakening the system of communal ownership of rural land. This study explores the rationale of land ownership policies enacted in China since 1978 to understand the trend toward privatization. Commonly, support for land ownership privatization has rested on two main assumptions. First, it is seen as a means to protect peasants’ interests and stimulate investment in agricultural production. Second, well-defined property rights may facilitate the transfer of land, thereby reducing transaction costs, and promoting the efficient utilization of land resources. However, this study finds that these assumptions in favor of strengthening peasants’ individual land rights are not borne out in the strategic behavior of land-rights holders. The ambiguity in how the Chinese household registration system qualifies who is a peasant, and thereby endowed with rights, has effectively allowed urban migrants to retain significant control over the majority of rural land while showing little interest in local village affairs. Quali¬tative research conducted in Anhui province reveals that instead of privatization promoting efficient land utilization, it creates a divide between land managed by local peasants who have remained committed to continuous cultivation and supplying fresh food, and land managed by absentees, which is often left idle for years or underutilized. This study contends that many elements of the increasingly marginalized communal land system are conducive to ensuring local food security, maintaining active rural governance, and preserving the social cohesion of rural communities.

Using registry data to assess gender-differentiated land and credit market effects of urban land policy reform: Evidence from Lesotho

While well-defined urban property rights to support land and financial markets are widely considered to be essential for economic development, many studies using household-based data to study titling programs’ impact yield inconclusive results. We use a 2010–13 titling program in Maseru to argue that this may partly be attributable to a failure of using administrative data and the fact that impacts of policy change that affect treatment and control are not identified in a standard difference in differences (DID) approach. Registry data show significant and sustained changes in quality of service delivery; female land ownership; and volume of registered land sales and mortgages due to the project. Econometric analysis supports this and points to significant effects of regulatory reform. We use this as a basis to discuss ways of combining registry and household survey data to better analyze this type of interventions.

Joint venture wildlife management of the Loliondo Game Controlled Area in Tanzania: a multi-criteria analysis

ABSTRACT This study focuses on wildlife management in the Loliondo Game Controlled Area (LGCA) in the northern region of Tanzania. There are ongoing concerns surrounding wildlife management in the LGCA including an acute lack of community involvement in the wildlife management planning and decision-making process, poorly defined property rights, and the unequitable distribution of the economic benefits generated from the ecotourism and trophy hunting schemes being implemented. Employing multi-criteria analysis techniques, this study explores and evaluates the alternative wildlife management options for the wildlife tourism site at issue. The joint venture wildlife management option has been identified as the most preferable. Under a joint venture wildlife management scheme, trophy hunting and ecotourism is allowed in the area designated for conservation, while livestock grazing, agriculture, and village settlements are permitted in the remaining area of the LGCA. Under this scheme, a community-based organization (CBO) is granted user rights to wildlife and other natural resources in the conservation area. A joint venture programme is established between commercial investors and a CBO. The study argues that joint venture wildlife management should be introduced to ensure well-defined property rights, implement efficient wildlife conservation, and the equitable share of economic benefits across the various stakeholders.

The lack of property rights can make natural disasters worse: The case of small-scale fisheries in Chile

Developing countries tend to suffer the most from natural disasters, but the mechanisms underlying this outcome are poorly understood. In this paper, I study one of the potential mechanisms behind this pattern: the lack of strong and well-defined property rights for renewable resources. Using fisheries as an example, I examine how different property rights regimes dictating who has access to the resource could determine the overall exposure, as well as the cost of the rebuilding paths that fishers follow after a natural disaster. Using small-scale fisheries in Chile as a case study, I show that fisheries operating in common access are on average more exposed and also follow costlier recovery paths after the tsunami that hit the country in 2010. This paper contributes to the ongoing work on the economic impact of natural disasters and provides an argument for further study of how institutional regimes can be also understood as potential adaptation strategies.

Property rights and market participation: evidence from the land titling program in rural China

The incomplete and unstable property rights of farmland in rural China hinder the development of the nation’s farmland rental market. The Chinese government implemented a land titling program in 2008 and conducted several pilot programs in various provinces to remove the barriers resulting from ambiguous property rights. Using data from the China Health and Retirement Longitudinal Study, this paper investigates the effects of rural land titling on market participation in rural China. First, we provide novel evidence regarding the impact of land titling on land market participation and investigate the heterogeneous wealth effects and geographic locations of land rental decisions. Second, we examine the endogeneity of land titling program implementation through empirical analysis. Our results indicate that clear and well-defined farmland property rights increase land rental activities and raise rental prices. We also find a significantly negative wealth effect in land transfer decisions, indicating that land titling encourages poorer farmers to rent out farmland. Land titling is found to promote land transfer, with the strongest effect in central China, and raise rental rates, with the largest increase in western China.

Land property rights and rural enterprise growth: Evidence from land titling reform in China

We exploit a large-scale land titling reform in China that clearly entitles rural households to land rights by issuing uniform land use certificates and study how this impacted entrepreneurship in rural areas. We find that the reform significantly increases business creation in rural areas without decreasing the quality of new entrants or incumbent businesses. It also spurs entrepreneurship among professional and large farmers and attracts more urban residents to start new businesses in rural areas. Additional analysis provides evidence that increased land and labor availability and productivity, and improved social trust may serve as the mechanisms underlying these effects. Altogether, these results reveal that well-defined land property rights have enabled more enterprise growth in rural areas.

Property rights and misallocation: Evidence from land certification in China

Employing 2015 and 2017 CFD data, this paper studies how the new round of a land certification program that aims to provide secure land titles for farmers has affected factor reallocation and aggregate output in China. The main findings are that land certification results in well-defined and secure property rights and leads to land and labor reallocation to more efficient farms with positive aggregate effects. Our paper also provides direct evidence of the reallocation mechanism by showing that the reform increases renting-out by low-productivity farmers and renting-in by more productive farmers. Moreover, the reform changes the likelihood of households remaining in agriculture: low-productivity households are more likely to have migrants than high-productivity households.

How do natural resource dependent firms gain and lose a social licence?

A project, firm or industry whose activities are accepted by communities and stakeholders is said to have a social licence to operate. The importance of a social licence is increasingly being realized in natural resource industries where a project or firm can impose more environmental and social costs, e.g. pollution, or strain on service delivery and housing, on communities than they are willing to accept. However, the conditions that are necessary and/or sufficient to obtain/maintain a social licence are unclear. To rectify this gap, a global literature review paired with a fuzzy-set qualitative comparative analysis of 47 natural resource case studies from 25 countries was used to identify the conditions necessary and/or sufficient to: (1) obtain or lose a social licence; (2) result in voluntary practice change by firms; and/or (3) create regulatory change. No single condition out of the ten conditions tested was found to be necessary to obtain or lose a social licence or to change firm behavior. However, a combination of five conditions created a robust pathway for maintaining a social licence, including: (1) delivery (or perception) of net economic benefits beyond the firm; (2) adequate stakeholder consultation; (3) minimal media coverage; (4) minimal public protests; and/or (5) absence of well-defined and enforced private property rights. These results contribute to an understanding of the somewhat limited effectiveness of social licence as a form of governance, and suggest that social licence outcomes are determined by the expectations of stakeholders, decisions and behaviors of firms, and broader institutional governance factors.

Incentives for landscape restoration: Lessons from Shinyanga, Tanzania

Owing to high rates of land and forest degradation, there is consensus that forest landscape restoration is a global priority with the Bonn Challenge and the New York Declaration on Forests committing to restore about 350 Million hectares by 2030, globally. However, there is a need for incentives that motivate these restoration efforts and disincentives aimed at restricting activities that result in further land degradation. We provide insights and understanding of the incentives and disincentives measures applied within the forest restoration systems through a case study in the Shinyanga region of Tanzania. Incentives that have promoted forest landscape restoration in Shinyanga include; conservation benefits, education and information, Reducing Emissions from Deforestation and forest Degradation (REDD+), well-defined property rights & increasing land prices and awards while disincentives include; penalties, quotas and permits. Intrinsic incentives that are derived from self-desire within an individual such as conservation benefits and education & information were more preferred within Shinyanga region compared to extrinsic incentives which relied more on external factors such as REDD+ and awards. Nonetheless, a combination of both incentives and disincentives has led to the success of restoration in Shinyanga; positive incentives worked better for privately owned lands while regulatory disincentives worked better for communally owned restoration lands. High levels of social equity and trust have enabled the functioning of these incentives while a robust governance structure at the local level has been instrumental in enforcing the disincentives. There is need for government and all stakeholders to maintain and enhance the gains from restoration, especially empowering communities further, for these incentives to work.

The Coase Theorem Tested in China

The Coase doctrine is usually presented as a static theorem purporting to explain the spontaneous correction of market defects by agreement between affected parties. However, as Stigler formulated it, those results are only reached under the questionable assumptions of zero transaction costs, well-defined property rights, and independence from the distributive effects of the agreements. The lack of realism of these assumptions has resulted in the unfortunate persistence in applying the statist theory of market defects as proclaimed by Pigou. The spectacular progress of the Chinese economy after Mao, as analyzed by Ronald Coase and Ning Wang.

The intrinsic fallacy of market mechanism and private property rights in alleviating the tragedy of the commons

ABSTRACT Economists’ solution to the tragedy of the commons relies on well-defined property rights and competitive market mechanism for limiting individuals’ self-serving, short-sighted actions that result in a dramatic depletion of the common resources. However, this solution implicates a serious threat in terms of sustainability. Recently, deterioration of genetic diversity reached alarming levels, mainly attributed to escalating economic pressure that obliges farmers to shift from local breeds towards more profitable and more productive industrial breeds. This study empirically examines the efficiency of the free market mechanism as a solution to the tragedy of the commons through a unique natural experiment in which a huge demand shock arises regarding sheep. Results robustly show that the free market mechanism can cope with even a very challenging demand shock through the adjustment of prices without any shortage of the commodity. However, this finding does not guarantee that such an outcome is sustainable over the very long term. Analysis of the growth rate of the local sheep breeds population and cross-breed sheep population shows that the trend is overwhelmingly in favour of cross-breeds, thus supporting concerns for a free market mechanism, intrinsically driving the extinction of local sheep breeds, an invaluable genetic resource.

Underwater Coase: Can Diving Save the Coral Reefs?

The absence of well-defined property rights in an ocean setting can lead to the over-exploitation of its resources. This paper examines one case, the Gili Islands, in Indonesia, where the weak enforcement of legally defined State rights led to the formalisation of local rules that protect coral reefs through a process of bargaining between dive schools and fishermen, who each utilise the surrounding coral reefs for their livelihoods. This article discusses whether it is possible, under these institutional arrangements, to increase the area of coral reef protection and whether these institutional arrangements can be introduced where similar threats to coral reefs exist.

Productive specialization, peaceful cooperation and the problem of the predatory state: lessons from comparative historical political economy

This paper reconceptualizes and unbundles the relationship between public predation, state capacity and economic development. By reframing our understanding of state capacity theory from a constitutional perspective, we argue that to the extent that a causal relationship exists between state capacity and economic development, the relationship is proximate rather than fundamental. State capacity emerges from an institutional context in which the state is constrained from preying on its citizenry in violation of predefined rules limiting its discretion. When political constraints are not established to limit political discretion, then state capacity will degenerate from a means of delivering economic development to a means of predation. In addition, we investigate two case studies of economic and political transition: the privatization of Russia following the collapse of the Soviet Union; and the political unification of Sicily with the Italian peninsula following the Napoleonic Wars. In each case, political and economic transition intended to secure well-defined and well-enforced property rights empowered the predatory capacity of the state. In each case, the attempt to redistribute property rights through political discretion only facilitated predation by the political elite.

Productive Specialization, Peaceful Cooperation, and the Problem of the Predatory State: Lessons From Comparative Historical Political Economy

This paper reconceptualizes and unbundles the relationship between public predation, state capacity, and economic development from a constitutional perspective. By reframing our understanding of state capacity theory from a constitutional perspective, we argue that to the extent there is a causal relationship between state capacity and economic development, the relationship is proximate rather than fundamental. State capacity emerges from an institutional context in which the state is constrained from publicly predating its citizenry in violation of predefined rules limiting its discretion. When political constraints are not established to limit political discretion, then state capacity will degenerate from a means of delivering economic development to a means of predation. In addition, we investigate two case studies of economic and political transition: the privatization of Russia subsequent to the collapse of the Soviet Union; and the political unification of Sicily with the Italian peninsula subsequent to the Napoleonic Wars. In each case, political and economic transition intended to secure well-defined and well-enforced property rights enabled the predatory capacity of the state. In each case, the attempt to redistribute property rights through political discretion only enabled predation by the political elite.

The revival of East Berlin’s land market after the German reunification

The communist regime in the German Democratic Republic (GDR) curtailed property rights in the urban land market through expropriation, forced administration, rationing, and restrained marketability. After the fall of the Berlin Wall in 1989, well-defined property rights had to be reestablished to restore competitive urban land markets under German laws. We examine the revival process from 1990 to 2008 for East Berlin, the capital of the former GDR. West Berlin, which always had a market-based land market, is used as comparator. We find that the revival of the East Berlin land market and substantial investment support resulted in a swift convergence in the composition of the housing stock and in the pricing behavior in both parts of Berlin.

Economics and Air Pollution- An Analysis of Chennai City

Air pollution causes a variety of environmental effects, besides harming human health. Acid rain is precipitation containing harmful amounts of nitric and sulfuric acids. These acids are formed primarily by nitrogen oxides and sulfur oxides released into the atmosphere when fossil fuels are burned. In the economics of pollution, we see that there is a point where both society and the environment have some satisfaction, or in other words, there is an optimum amount of pollution. The optimum amount of pollution can be defined as the point where the marginal benefit equals the marginal cost of pollution. Air pollution is responsible for major harmful effects on human health, animal lives, natural ecosystems and the man-made environment. It is also responsible for climate change due to the enhanced greenhouse effect, acid rain, and the depletion of the ozone layer that constitute important global environmental problems. The relationship between environmental degradation and economic growth has been object of constant debate among environmental economists. During the last two decades, the debate between economic growth and the environment introduced into the discussion. External effects or externality is one of the most basic concepts evoked by economists when looking at problems of environmental pollution. The market impacts of outdoor air pollution are projected to lead to global economic costs that gradually increase to 1% of global GDP by 2060. Costs related to additional health expenditures and labour productivity losses dominate in the long run. From an economics perspective, demand law suggests an inverse relationship between price and the quantity consumed of a marketable product. However, when a product does not have a very well-established market, this product will be most likely underpriced. This is the case of natural systems such as air or water. The lack of property rights for these natural inputs and the absence of environmental regulation or legal protection to pollution receptors make a firm to perceive air as an input that can be freely used, like a common resource, thus neglecting all external costs imposed to other agents of the economy. In other words, if there were well-defined property rights for air, firms would have to buy the right to pollute it and emissions could be internalized through a market mechanism. The six-scale Air Quality Index (AQI) rates air quality from ‘good’ (minimal impact) to ‘severe’ (affects healthy people and seriously impacts those with existing diseases). The air quality in Chennai has deteriorated sharply, with the AQI downgrading air quality in the city from ‘satisfactory’ to ‘very poor’.

The Economics of Ownership, Access and Trade in Digital Data

Despite the rapidly growing volume and economic importance of data in the digital economy, the legal framework for data ownership, access and trade remains incompletely defined in the EU and elsewhere. De facto data ownership dominates and often leads to fragmentation or anti-commons problems in data. Combined with limited access and trade, this inhibits the realisation of the full economic benefits of non-rival data. It may slow down innovation and affect the efficiency of data markets. We examine three potential sources of data market failures: externalities related to economies of scope in data, strategic behaviour of data owners and transaction costs in data exchanges. We link the legal debate on data ownership with relevant branches of the economics literature, including intellectual property rights economics, the commons and anti-commons literature, models of trade under the Arrow Information Paradox and multi-sided markets. Economists are inclined to think that well-defined private property rights are a necessary condition for an efficient resource allocation. The question in this paper is to what extent this view holds for non-rival data. We show that the allocation of data ownership or residual control rights matters, not only for private benefits but also for social welfare. The outcomes of bargaining over data ownership and access rights do not necessarily maximize social welfare. Can regulators intervene to improve these outcomes? Would a better specification of legal ownership rights or introducing access provisions to improve efficiency and reduce data market failures? There are no easy answers to these largely empirical questions. We offer no policy solutions yet and more research is required to bring economics up to speed with these questions.

Big Data aus wettbewerblicher Sicht

Business models in the digital economy often rely on non-monetary payments from users, either in the form of attention for advertising or in the provision of personal data. Gathered data can be used to improve targeted advertising or develop new products and services. Besides these welfare gains, privacy issues may ensue, which can be mitigated by strict transparency provisions and welldefined property rights on data. Big data can furthermore establish barriers to entry if increasing returns to scale are present and thus lead to market concentration. However, the current competition policy framework seems mostly suitable to handle these issues.