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Property is only another name for decentralized creation of knowledge

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  • Juan Ramón Rallo

    (Universidad Francisco Marroquin)

Abstract

Eric A. Posner and E. Glen Weyl argue in a recent paper that a private property regime is incompatible with allocative efficiency insofar as it allows owners to ask for monopoly prices to potential buyers. In order to remedy this defect without penalizing investment efficiency, they propose to implement a Harberger tax. In this paper we show that the Harberger tax is a mechanism that penalizes the informational investment necessary to reach efficient estimates of the fundamental value of assets and, therefore, a mechanism that move us away from both investment efficiency and allocative efficiency.

Suggested Citation

  • Juan Ramón Rallo, 2019. "Property is only another name for decentralized creation of knowledge," European Journal of Law and Economics, Springer, vol. 47(1), pages 43-55, February.
    • Handle: RePEc:kap:ejlwec:v:47:y:2019:i:1:d:10.1007_s10657-018-9607-6
    DOI: 10.1007/s10657-018-9607-6
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    References listed on IDEAS

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    1. Grossman, Sanford J & Stiglitz, Joseph E, 1980. "On the Impossibility of Informationally Efficient Markets," American Economic Review, American Economic Association, vol. 70(3), pages 393-408, June.
    2. Boettke, Peter J, 2002. "Information and Knowledge: Austrian Economics in Search of its Uniqueness," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 15(4), pages 263-274, December.
    3. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
    4. Ramsey, James B, 1970. "The Marginal Efficiency of Capital, the Internal Rate of Return and Net Present Value: An Analysis of Investment Criteria," Journal of Political Economy, University of Chicago Press, vol. 78(5), pages 1017-1027, Sept.-Oct.
    5. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    6. Fama, Eugene F, 1970. "Efficient Capital Markets: A Review of Theory and Empirical Work," Journal of Finance, American Finance Association, vol. 25(2), pages 383-417, May.
    7. Stigler, George J., 2011. "Economics of Information," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 5, pages 35-49.
    8. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Harberger tax; Property; Efficiency; Knowledge;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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