Incomplete property rights and overinvestment

I consider a model in which an asset owner must decide how much to invest in his asset mindful of the fact that an encroacher??s valuation of the asset is increasing in the asset owner??s investment. Due to incomplete property rights, the encroacher and asset owner engage in a contest over the control of the asset after investment has taken place. A standard result is that the asset owner will underinvest in the asset relative to the first-best level of investment when property rights are complete. Contrary to this standard result, I find that when the interaction between the asset owner and the encroacher is infinitely repeated and the encroacher has some bargaining power over the size of the transfer from the asset owner to him, then there is a cooperative equilibrium in which the asset owner finds it optimal to overinvest in the asset when property rights are incomplete relative to the first-best level of investment when property rights are complete. Overinvestment is used to induce cooperation. However, this result depends on the encroacher??s bargaining power or, more generally, whether the transfer is an increasing function of investment.     

No externalities: a characterization of efficiency and incentive compatibility with public goods

We show that efficient anonymous incentive compatible (dominant strategy) mechanisms for public goods eliminate externalities, i.e., each individual is unable to change the welfare of anyone else. The characterization is used to derive existence and non-existence results for models with a finite number of individuals and to explain existence results in the continuum. A similar characterization and conclusions are demonstrated for private goods in (J Econ Theory 85:169–225, 1999). However, unlike private goods, elimination of externalities with public goods implies that individuals cannot change the outcome. Hence, such mechanisms provide only weak incentives for truth-telling.     

Institutions and the adoption of rights: political and property rights in Colombia

Citizenship rights are the result of specific political bargains between different collective actors and state authorities (Tilly Theory and Society 26(34):599–602, 1997). The political bargains for rights are encoded in institutions, and these institutions develop independently from each other and take organizational characteristics that make certain rights easier to adopt than others. I argue that these institutions vary along two dimensions that affect the extent to which states can adopt rights successfully: one dimension is distributional and the second is the depth or extension of the rules that frame a given right. This article focuses on the institutional differences between property rights, especially land property, and political rights, and on the consequences of those differences on their adoption. I then illustrate my argument with examples from Colombia since 1980.     

Incomplete property rights, redistribution, and welfare

In a world where the private protection of property is costly, government redistribution can lead to an increase in aggregate output. This result is not new. The novelty of this paper lies in specifying the conditions under which this efficiency-enhancing redistribution improves everyone’s welfare including the welfare of those whose labor finances the redistributive program (i.e., the rich) and how this is affected by the protection of property rights. The state may directly enhance economic rights through investments in security and the protection of property or it may indirectly do so through the redistribution of income. Under certain conditions, redistribution becomes desirable in situations where the state has exhausted its ability to enhance efficiency through the direct enforcement of property rights. In this case, redistribution can make all members of a society better off. Specifically, this occurs when the cost of predation is sufficiently low and the technology of private protection of property rights is sufficiently weak. The adverse effects of redistribution may be the consequence but not the cause of state failure. The real cause is a corrupt and inept state. My thanks are due to an anonymous referee and Zane Spindler for very helpful and critical comments. I thank SSHRC for financial support     

Appeals to social norms as policy instruments to address consumption externalities

We consider appeals to social norms as a policy instrument to address consumption externalities. We explore whether appeals to social norms can be an efficient policy instrument and compare the efficiency of such appeals to the efficiency of taxation in addressing consumption externalities. We find that when the existing norm helps to shift consumption towards the socially optimal level of consumption, taxation welfare dominates appeals to social norms as a policy tool. While previous studies have found that economic instruments are superior to information in other contexts, we arrive at a different conclusion for situations where the norm shifts behavior away from what is socially optimal. In such cases appeals to social norms can be a better policy instrument than taxation.     

Enforcement of property rights in a barter economy

If property rights to consumption goods are insecure, the incentives to trade in a barter economy are reshaped. In a pure exchange economy, we examine the case where two contestable consumption goods are vital to two agents and initial endowments follow a binary distribution. In line with the existing literature, we examine in a two-stage game how the equilibrium security of claims to property is determined. We find that, depending on the exogenous preference and appropriation-effectiveness parameters, two different regimes emerge in equilibrium: trade and appropriation, and peaceful coexistence, with the latter regime exhibiting efficiency with respect to the goods traded. However, inefficiencies arise due to the investment in defensive activities necessary to deter appropriation. Thus, we have found an endogenously determined measure for the transaction cost underlying a market which replicates the outcome of a Walrasian market.     

An analytical framework for urban upgrading: property rights, property values and physical attributes

In the mid-1980s, the state government of Maharashtra, India, introduced a slum redevelopment strategy in its capital city, Mumbai (Bombay). In contrast to traditional housing improvement strategies that focus primarily on legalizing the land tenure of residents, slum redevelopment is a more complex strategy. It involves the demolition of existing slums and the redevelopment of new, higher density, medium-rise apartment blocks, including, entirely cross-subsidized housing for the original slum dwellers. Mumbai's experience, documented through a single case study in this paper, illustrates that contrary to the conventional focus only on private property rights, upgrading policy must be based on a differentiated view of property rights. Furthermore, policy must also consider the property values, the physical attributes of the real property (underlying asset), and the interplay among property rights, property values and physical attributes. Second, the paper demonstrates that under certain conditions, there is a constituency among slum dwellers for complex initiatives, like redevelopment. This suggests that planners should be skeptical about popular, simplistic myths regarding low-income housing preferences. However, slum redevelopment's slow pace also implies that planners need to be cautious in their enthusiasm for redevelopment.     

On the social stability of coalitional property rights regimes

We present a model of coalitional property rights (CPR) regimes– regimes in which ownership of a good is attributable to coalitions of various sizes. Specifically, for each good, we define a legal structure that specifies the legal coalitions of individuals that share a communal claim to that good. Generally, each legal coalition may use exclusionary rules to allocate its holdings internally. These rules allow eligible subcoalitions to recontract by expropriating some fraction of the legal coalition's endowment. We then ask: what types of CPR regimes are socially stable in the sense of having a nonempty core? We give conditions on the legal structure and the primitives of the economy that achieve social stability in this sense. We emphasize two cases of particular interest. ( I ) Unanimity. Unanimity is required for a legal coalition to recontract against (block) the status quo. In this case, the core is nonempty under standard assumptions. Each agent's ability to veto an alternative allocation allows a partial characterization in terms of the economies that are privatized by dividing up the communal endowment among the members of each legal coalition. We show that in some economies' collective vs private ownership matters in terms of social stability. ( II ) Exclusion. Many eligible subcoalitions can expropriate the legal coalition's entire endowment. An example is the collection of simple majorities. The presence of cycles can easily lead to social instability. We show that if endowment holdings are sufficiently “specialized” and each agent's “veto power” sufficiently large, then stability can be achieved despite the presence of cycles in some goods. Received: 30 June 1993/Accepted: 28 February 1998     

Global strategies and local practices in film consumption

Media and popular culture in late modernity are commodified, as cultural industries distribute products (ways of life) via the market to their users. The growth of investment and the ongoing battle between media groups at an international level raises many questions about cinema practice, experience, meaning, esthetics and cultural practices in general. Greek cinema exhibition constitutes a specific case study which can be used to scrutinize the relationships between local cultural practices and transnational consumption models. This paper centers on the role played by multinational companies in a globalized society, focusing on cinema outlets, movie houses and in particular on film exhibition sites. It seeks to shed light upon mutations produced in modern societies by management, as well as the global strategies of international corporations.     

The structure of rights in the context of private property

Some rights to resources adhere to individuals on the basis of ascribed characteristics—these are rights of person. These rights are not subject to voluntary alienation. And there are rights that adhere to specific characteristics of resources and are subject to alienation. These are rights in property. However, there has been a systematic tendency to promote property rights at the expense of the rights of person and, in so doing, confound the analysis of the commons, of common property, and of private property. Given a delineation of fundamental concepts, this paper examines critically the foundational works of Demsetz and Coase and shows that their theoretical arguments depend on an implicit denial of all rights of person. It is shown, however, that rights of person are not properly analyzable by the standards that apply to rights in property and that the optimal policy to pursue in contemporary society is to determine a desired configuration rights and responsibilities in combination with rights in property.     

The structure of rights in the context of private property

Some rights to resources adhere to individuals on the basis of ascribed characteristics—these are rights of person. These rights are not subject to voluntary alienation. And there are rights that adhere to specific characteristics of resources and are subject to alienation. These are rights in property. However, there has been a systematic tendency to promote property rights at the expense of the rights of person and, in so doing, confound the analysis of the commons, of common property, and of private property. Given a delineation of fundamental concepts, this paper examines critically the foundational works of Demsetz and Coase and shows that their theoretical arguments depend on an implicit denial of all rights of person. It is shown, however, that rights of person are not properly analyzable by the standards that apply to rights in property and that the optimal policy to pursue in contemporary society is to determine a desired configuration rights and responsibilities in combination with rights in property.     

Agency costs,property rights,and the evolution of labor unions

Collective bargaining requires that an agent represent workers. This paper examines the implications for the trade union movement of the resulting agency costs. Without transferable rights in the union, union members lack the means and incentive to bring forth the innovative agent controls common to the modern corporation. Considerations of the bargaining strengths of employers and employees, each represented by an agent, provide an explanation of the simultaneous decline of private sector union membership (corporate share holders have been more successful at lowering agency costs) and growth of public sector union representation (where the union official, a “double agent,” serves the interest of both employee and bureaucratic employer). The authors acknowledge the helpful remarks Donald L. Martin whose earlier research on property rights in unions inspired this effort. Don Bellante’s work was supported by a grant from the Research Committee of the College of Business Administration, University of South Florida.     

Paretian efficiency,rawlsian justice and the Nozick theory of rights

In this paper the circumstances under which a Nozickian libertarian claim can produce self-consistent results are studied. These circumstances are shown to consist of technological separability of social alternatives and partial separability of individual preferences. Under these conditions some restricted versions of the Pareto principle and of the Rawlsian maximin can be reformulated consistently with the Nozickian libertarian claim. Also, in absence of external utility, Paretian efficiency, Rawlsian distributive justice and the Nozickian libertarian claim are consistent and can be together satisfied by a choice procedure. Moreover, the Nozick libertarian claim is shown to be satisfied by a perfectly competitive economy. A parallelism between a general equilibrium market system and a Nozickian rights system is pointed out.For helpful comments on an earlier version I am very grateful to C.J. Bliss, G. De Fraja, A. Sen, and an anonymous referee     

Social stratification in transitional economies: property rights and the structure of markets

In transitions from state socialism, property rights are re-allocated to organizations and groups, creating new markets and new forms of economic enterprise that reshape the stratification order. A generation of research has estimated individual-level outcomes with income equations and mobility models, relying on broad assumptions about economic change. We redirect attention to the process of economic change that structures emerging markets. The process varies across market sectors, depending on the entity that is granted rights formerly exercised by state organs, and on the combination of rights they are granted. The transformation of three sectors in China—agriculture, steel manufacturing, and real estate—shows how different allocations of property rights alter the stratification order in strikingly different ways. Historical analysis of the evolution of markets and enterprises integrates insights from economic sociology into research on social stratification, providing a structural perspective on transitions from state socialism.     

日本和俄罗斯农地产权制度变革及其对中国的借鉴价值

土地问题在我国具有重要的现实意义.农业和农村经济的发展、乡村城镇化、农村劳动力转移乃至农村小康社会的建设,无不与土地问题密切相关.然而,一段时期以来.在农业结构调整、农业产业规模经营、城市化和工业化等过程中,村组集体随意终止土地承包合同,无偿收回或非法转让、出租农民承包土地,强迫农民以土地入股等干涉农民土地经营自主权的行为时有发生,导致农村土地纠纷呈扩大、蔓延之势,成为影响农村经济发展和社会稳定的突出矛盾.     

Ecological citizenship and sustainable consumption: Examining local organic food networks

Sustainable consumption is gaining in currency as a new environmental policy objective. This paper presents new research findings from a mixed-method empirical study of a local organic food network to interrogate the theories of both sustainable consumption and ecological citizenship. It describes a mainstream policy model of sustainable consumption, and contrasts this with an alternative model derived from green or ‘new economics’ theories. Then the role of localised, organic food networks is discussed to locate them within the alternative model. It then tests the hypothesis that ecological citizenship is a driving force for ‘alternative’ sustainable consumption, via expression through consumer behaviour such as purchasing local organic food. The empirical study found that both the organisation and their consumers were expressing ecological citizenship values in their activities in a number of clearly identifiable ways, and that the initiative was actively promoting the growth of ecological citizenship, as well as providing a meaningful social context for its expression. Furthermore, the initiative was able to overcome the structural limitations of mainstream sustainable consumption practices. Thus, the initiative was found to be a valuable tool for practising alternative sustainable consumption. The paper concludes with a discussion of how ecological citizenship may be a powerful motivating force for sustainable consumption behaviour, and the policy and research implications of this.     

Union merger incentives and pecuniary externalities

The collective bargaining process is influenced by the market structure that exists on both sides of the bargaining table. That structure, in turn, is affected by the merger activity of both firms and unions. Until recently, however, union merger incentives have remained unexplored. This paper surveys the principal theories that explain these incentives and develops a new theory of union mergers based on pecuniary externalities between unions. We are grateful to Ethel Jones, Jim Long, and an anonymous referee for useful comments on a prior draft of this paper. The usual caveat applies.