Furthermore, more exclusive rights increase the incentive to improve the value of the asset by investment, e.g. The more exclusive are property rights to the individual or group the greater the incentive to maintain the value of the asset. Property rights matter because they determine resource use. In Section 7 we present some concluding remarks. In Section 6 we explore the development of property rights in the Brazilian Amazon through the lens of our analytical framework. In Sections 4 and 5 we develop an analytical framework for understanding the evolution of property rights, with special emphasis on the difficulties in changing property rights. In Sections 2 and 3 we briefly discuss the role that property rights play in resource use and provide some background on the determinants of property rights. Shirley (eds.), Handbook of New Institutional Economics, 573–590. Violence or threats of violence may also result when the state attempts to redistribute property rights.Ĭ. From the vantage point of societies, violence is wasteful and can be a motivating force for the state to enforce property rights. In many situations individuals or groups use violence as a strategy to capture property rights. Individuals and groups have incentives to expropriate the use rights over attributes that the state leaves as open access. As such, some attributes may be either de jure or de facto left as open access. Moreover, many assets have multiple dimensions and it is costly for the state to define property rights over all valuable dimensions and costly for the state to enforce property rights over all dimensions. All three functions entail costs and for this reason some rights may be left by the state as open access. Enforcement of property rights is a police function of the state. Interpretation of property rights is a judicial function of the state. Definintion of property rights is a legislative function of the state.
One role of the state is to define, interpret and enforce property rights.
For example, a societal group, e.g., a village, tribe or homeowner’s association, may allow its members to place cattle in a common pasture but limit the number of cattle that any member may put on the commons. Under a commons arrangement only a select group is allowed access to the asset and the use rights of individuals using the asset may be circumscribed. Commons arrangements differ from open access in several respects. In between open access and private property rights are a host of commons arrangements.
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A full set of private rights consists of the following: 1) the right to use the asset in any manner that the user wishes, generally with the caveat that such use does not interfere with someone else’s property right 2) the right to exclude others from the use of the same asset 3) the right to derive income from the asset 4) the right to sell the asset and 5) the right to bequeath the asset to someone of your choice. By open access we mean that anyone can use the asset regardless of how their use affects the use of others. Property rights range from open access to a fully specified set of private rights. Property rights consist of the set of formal and informal rights to use and transfer resources. Property rights determine the incentives for resource use.
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