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How should we model property? Thinking with my critics

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Abstract

Inspired by comments made by Allen (2017), Lueck (2017), Ménard (2017) and Smith (2017), this response clarifies and deepens the analysis in Arruñada (2017a). Its main argument is that to deal with the complexity of property we must abstract secondary elements, such as the physical dimensions of some types of assets, and focus on the interaction between transactions. This sequential-exchange framework captures the main problem of property in the current environment of impersonal markets. It also provides criteria to compare private and public ordering, as well as to organize public solutions that enable new forms of private ordering. The analysis applies the lessons in Coase (1960) to property by not only comparing realities but also maintaining his separate treatment of the definition of property rights and transaction costs. However, it replaces his contractual, single-exchange, framework for one in which contracts interact, causing exchange externalities.

Suggested Citation

  • Benito Arruñada, 2017. "How should we model property? Thinking with my critics," Economics Working Papers 1570, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:1570
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    1. Benito Arruñada, 2002. "A Transaction Cost View of Title Insurance and its Role in Different Legal Systems," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 27(4), pages 582-601, October.
    2. Ménard, Claude, 2017. "What approach to property rights?," Journal of Institutional Economics, Cambridge University Press, vol. 13(4), pages 801-807, December.
    3. A. Mitchell Polinsky & Steven Shavell (ed.), 2007. "Handbook of Law and Economics," Handbook of Law and Economics, Elsevier, edition 1, volume 2, number 2.
    4. Antony Dnes & Dean Lueck, 2009. "Asymmetric Information and the Law of Servitudes Governing Land," The Journal of Legal Studies, University of Chicago Press, vol. 38(1), pages 89-120, January.
    5. Allen, Douglas W., 2017. "Property as sequential exchange: definition and language issues," Journal of Institutional Economics, Cambridge University Press, vol. 13(4), pages 785-792, December.
    6. Lueck, Dean, 2017. "Property institutions and the limits of Coase," Journal of Institutional Economics, Cambridge University Press, vol. 13(4), pages 793-800, December.
    7. Thomas W. Merrill & Henry E. Smith, 2011. "Making Coasean Property More Coasean," Journal of Law and Economics, University of Chicago Press, vol. 54(S4), pages 77-104.
    8. Smith, Henry E., 2017. "Property as complex interaction," Journal of Institutional Economics, Cambridge University Press, vol. 13(4), pages 809-814, December.
    9. Arruñada, Benito & Hansen, Stephen, 2015. "Organizing public good provision: Lessons from Managerial Accounting," International Review of Law and Economics, Elsevier, vol. 42(C), pages 185-191.
    10. Gary D. Libecap & Dean Lueck, 2011. "The Demarcation of Land and the Role of Coordinating Property Institutions," Journal of Political Economy, University of Chicago Press, vol. 119(3), pages 426-467.
    11. Claude Ménard, 2017. "What approach to property rights?," Post-Print hal-04001058, HAL.
    12. Claude Ménard, 2017. "What approach to property rights?," Post-Print hal-04011831, HAL.
    13. A. Mitchell Polinsky & Steven Shavell (ed.), 2007. "Handbook of Law and Economics," Handbook of Law and Economics, Elsevier, edition 1, volume 1, number 1.
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    More about this item

    Keywords

    property rights; externalities; enforcement; transaction costs; public ordering; private ordering; impersonal exchange.;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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