Imperfect Property Rights

James Bessen

Working Papers from Research on Innovation

Abstract: In theory, property rights allow markets to achieve Pareto optimal allocations. But the literature on contracting largely ignores what happens when property rights are imperfectly defined and enforced. Although some models include weak enforcement or poorly defined rights or "anticommons," this paper develops a general model that includes all of these possibilities. I find that combinations matter: Policy prescriptions to remedy individual imperfections are sometimes inappropriate under other conditions. For example, stronger penalties for violating rights can decrease Pareto efficiency, contrary to a common view. Also, collective rights organizations, such as patent pools, sometimes worsen problems of overlapping claims.

Keywords: property; markets; externalities; contract enforcement; regulation (search for similar items in EconPapers)
JEL-codes: K11 K42 L14 L51 (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:roi:wpaper:0903

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