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Clearly defined and enforceable property rights are commonly recognized as prerequisites to economic calculation and the market process. The purpose of this paper is to argue that when entrepreneurs add or subtract certain rights from the bundle of rights that constitute a property right they face a classic planner’s dilemma: the need to separate the technologically possible from the economically feasible. Traditionally, prices provide the signals needed to resolve the planners dilemma, but because prices refer to the entire bundle of rights that constitutes property, the entrepreneur is unable to immediately identify the combination of rights that isolates the attribute of a good consumers desire to purchase. Creating new bundles of property rights results in new prices, which generate new information essential to further developing economically viable arrangements of property rights; hence, property rights are dynamic.
The paper develops the theory of dynamic property rights, and then offers two case studies that illustrate different elements in the theory. One case study applies the theory to productive entrepreneurship, specifically in the sharing economy. The second case study applies the theory to protective entrepreneurship via a historical study of land title use in England and France. The author concludes with policy implications.
Recognizing that property rights are dynamic has several important implications. Restricting the bundling or de-bundling of property rights is a form of intervention in the market process equivalent to price fixing. Similarly, efforts to support property rights protecting institutions need to account for the fact that property rights bundles are not necessarily static but control over them needs to be stable and predictable. Finally, a more robust and accurate conceptualization of the marking process and what it means to “economize” on scarce resources does not just include the efficient allocation of property rights, but also the efficient allocation of the underlying rights bundles themselves.
A dynamic theory of property rights allows the author to understand how property rights evolve and offer an account of different property rights regimes by highlight the living connection between productive and protective entrepreneurship.
This paper aims to integrate ideas from market process theory with entrepreneurship and institutional evolution. The paper extends the ideas in the UCLA property rights school to illuminate two case studies – one highly relevant to current policy makers, and the other relevant to development economists.
The purpose of this paper is to develop a theory of sovereign entrepreneurship, which is a special kind of political entrepreneurship.
This paper uses qualitative methods/historical survey.
Sovereignty is rooted in self-enforced exchange of political property rights. Sovereign entrepreneurship is the creative employment of political property rights to advance a plan.
Because a polity’s constitution is determined by its distribution of political property rights, sovereign entrepreneurship and constitutional change are necessarily linked. The author illustrated how sovereign entrepreneurship can be applied by using it to explain the rise of modern states.
In addition to studying instances of sovereign entrepreneurship in distant history, scholars can apply it to recent history. Sovereign entrepreneurship can be especially helpful as a tool for doing analytic narratives of low-n cases of political-economic development, especially when those polities attract interests for being “development miracles.”
This paper uses treats sovereignty as a political property right.
There is a tension between the literatures on incomplete contracting and transactions cost economics regarding the importance of ex post governance and the extent to which…
There is a tension between the literatures on incomplete contracting and transactions cost economics regarding the importance of ex post governance and the extent to which formal theories of incomplete contracting capture salient aspects of exchange relations. In this paper, we empirically examine how firms structure joint R&D agreements to illuminate how contracts can be incomplete and how governance can matter. We employ a dataset of 96 contracts to construct a taxonomy of the types of mechanisms firms use in organizing collaborative R&D, and indicate how groups of mechanisms line up with various types of contracting hazards. The results suggest that the allocation of property rights over innovations at the time of contracting between R&D partners is an important aspect of contract design. But they also suggest that weak property rights admit scope for other dimensions of contract. In particular, the research indicates that while knowledge spillovers may give rise to appropriability hazards, efforts to contain or channel knowledge spillovers may enable joint venture members to strategically block other members’ follow-on commercialization or research. Firms design joint R&D governance mechanisms to balance spillover hazards and strategic blocking.
This paper discusses the institutionalists' economic thought and how they saw the role of property rights in economic development. It points out that the role of various…
This paper discusses the institutionalists' economic thought and how they saw the role of property rights in economic development. It points out that the role of various institutions in the economic performance of many developing countries cannot be ignored. One of the important institutional factors in many developing countries and transitional economies is the nature and definition of property rights. This paper therefore addresses the impact of property rights on overall economic performance of a country and more specifically on agricultural production and on the conservation and management of the environment. It is generally agreed that property rights are a claim to a benefit stream where the state provides protection from others who may interfere with the benefit stream. Well‐defined property rights are considered vital for transitional economies which are undertaking major structural changes. The recent literature on property rights in transitional economies is largely concentrated on the former socialist and communist economies of Eastern Europe, which are embracing the market economy. However, this also has significant implications for many developing countries like Fiji which can also be considered as transitional economies. For Fiji the transition is from a highly protected, inward‐looking economy towards an export‐oriented economy. Getting the property rights “right” seems to be one of the major obstacles to economic reform agendas for many of the South Pacific countries including Fiji.
After the precipitated decline of the Soviet Empire and its satellite states, a system change seemed to be called for, and many countries embarked on social and political…
After the precipitated decline of the Soviet Empire and its satellite states, a system change seemed to be called for, and many countries embarked on social and political reforms focussing on property structures in the economy. This raised the issue of governance in the institutions that would constitute the structures in which production would have to take place. In particular, some Central European countries opted for mass privatisations of the means of production, on the face of it so as to have the people participate in the wealth of the nation. In fact, the wealth of the nation depends on the structures in which it is constituted. Dissipation of property rights will reduce the value of the nation's productive capital, whereas an intelligent structure that creates good governance structures at the same time, increases the value of the producing capital. This relatively simple insight lies at the heart of our understanding of how to analyse different processes of mass privatisation. This essay develops a theoretical framework by which different governance structures can be analysed. The framework consists of a blend of the economic theory of property rights, new institutional economics and Austrian economic theory.
Throughout history, social philosophers have justified titles of possession by the right of occupation, labour, and social contract, while the economic justification rests…
Throughout history, social philosophers have justified titles of possession by the right of occupation, labour, and social contract, while the economic justification rests on efficiency grounds. Subscribing to the extremely contestable argument that there is a connection between private property rights and the performance and prosperity of capitalism, de‐socialization of ownership was to become the backbone for market oriented reforms in post‐communist society. The absence of clearly defined property rights, their capricious enforcement, widespread cronyism and criminal activity, in combination with a lack of resolution to terminate the quasi‐property rights of the former ruling elite, and imperfect markets have created a situation where, in the final analysis, the original foundation of most rights to property and wealth would hardly survive the test of justice and be validated in any socially responsible society. Moral precepts aside, given these circumstances, it would be hard for an economist to argue that the present process of re‐allocation of rights could be explained on efficiency grounds.
We argue that the stakeholder and CSR literature can benefit from more systematic thinking about ownership. We discuss general notions of ownership in the economics and…
We argue that the stakeholder and CSR literature can benefit from more systematic thinking about ownership. We discuss general notions of ownership in the economics and legal literature and the entrepreneurial notion of ownership we have developed in prior work. On this basis, we argue that stakeholder theory needs to deal more systematically with ownership as an economic function that can be exercised with greater or lesser ability, may be complementary to other economic functions, and works better when assigned to homogeneous groups. Some stakeholder groups are likely to lack what we call “ownership competence,” even if they have made relationship-specific investments, in part because of a diversity of interests. We also discuss CSR from the perspective of ownership and support Friedman’s original position, but with a twist. The point of Friedman’s paper is not that firms “should” maximize profits, but that managerial pursuit of “socially responsible” activities in a discretionary way imposes costs on owners. We suggest this problem is exacerbated with entrepreneurial managers who can devise new ways to prop up their self-interested actions with new creative CSR initiatives.
Mass privatization is one form of changing the property rights regime of formerly publicly‐owned means of production in the former peoples’ republics of Central and…
Mass privatization is one form of changing the property rights regime of formerly publicly‐owned means of production in the former peoples’ republics of Central and Eastern Europe. From an economic point of view, the central question at this transition is whether the change in property rights regimes significantly and benevolently affects the governing structure of the assets in question. This short essay attempts to provide a framework which is theoretical enough to guide meaningful questions, and open and naïve enough not to preclude relevant insight. The contribution of this article consists in a theoretically driven questionnaire which, based on the current state of the property rights theory of the firm, the relevant aspects of law and economics as well as financial economics, tries to elicit scholarly information about issues of institutional detail. Ultimately, the aim is to show how the different approaches to mass privatization can be evaluated from the point of view of creating viable governing structures.
The goal of interfirm contract research is to examine how formal contracts impact transaction success, firm relationships, and ultimately individual and collaborative firm…
The goal of interfirm contract research is to examine how formal contracts impact transaction success, firm relationships, and ultimately individual and collaborative firm performance when two or more firms interact. Most contract literature uses an economic lens to examine contracts: the property rights perspective, agency theory, and TCE. Property rights-based contract research (Coase, 1960; Demsetz, 1967; Alchian & Demsetz, 1973; Cheung, 1969) examines how efficient property rights assignment mitigates ex ante hazards. Similarly, agency theory-based contract research (e.g., Ross, 1973; Jensen & Meckling, 1976; Harris & Raviv, 1979) investigates how incentive alignment between the principal and agent leads to the mitigation of ex ante hazards. In contrast, TCE-based research (Williamson, 1975, 1985) examines contractual safeguards to mitigate both ex ante and ex post hazards (e.g., Joskow, 1985, 1987, 1990; Crocker & Reynolds, 1993). Because the three economic perspectives dominate, most research addresses how contracts are used to mitigate ex ante or ex post hazards. Therefore, many topics still need to be investigated to enhance our understanding of interfirm contracting.
Since the late 1970s there have been a number of articles devotedto re‐evaluating the issues and arguments involved in the debateconcerning comparative economic systems…
Since the late 1970s there have been a number of articles devoted to re‐evaluating the issues and arguments involved in the debate concerning comparative economic systems. The present state of this continuing debate is evaluated with regard to modern theories of planning, bureaucracy, motivation and property rights. It appears that the debate has not been settled yet.