Exchange Efficiency with Weak Ownership Rights

Oren Bar-Gill and Nicola Persico

American Economic Journal: Microeconomics, 2016, vol. 8, issue 4, 230-67

Abstract: We show that efficient exchange obtains independently of the degree to which a legal system protects the rights of owners. We study a number of different legal rules, including property rules (strong protection), liability rules (any party can take the owner's asset but must pay a legally determined compensation), and even rules that protect the owner's interests very weakly (liability rules with a very low compensation level). Efficiency is obtained as long as the degree of protection provided by law and by the bargaining protocol is not "too" inversely correlated with a party's valuation of the asset.

JEL-codes: D21 D51 K11 O34 P14 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/mic.20140232
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Citations: View citations in EconPapers (6)

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