Enforcement of Property Rights in a Barter Economy

Magnus Hoffmann

MPRA Paper from University Library of Munich, Germany

Abstract: 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, in equilibrium, two different regimes emerge, depending on the exogenous preference and appropriationeffectiveness parameters: Peaceful coexistence and trade and appropriation,with the former regime strictly Pareto-dominating the latter regime.

Keywords: Barter Exchange; Contests; Security of Property Rights (search for similar items in EconPapers)
JEL-codes: F10 C72 D51 D74 (search for similar items in EconPapers)
Date: 2006-08
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http://mpra.ub.uni-muenchen.de/3260/ orginal version
http://mpra.ub.uni-muenchen.de/6181/ revised version

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