Property rights, transaction costs and economic outcomes

Yasir Amin ()
Additional contact information
Yasir Amin: University of Bologna

Economics of Governance, 2025, vol. 26, issue 3, No 4, 400 pages

Abstract: Abstract A growing body of literature provides evidence that strong original owners’ property rights are associated with improved economic outcomes. However, recent research suggests that weaker property rights may represent an efficient societal response to high transaction costs. This paper examines the impact of property rights on economic performance, specifically income, unemployment, credit, and innovation, while accounting for transaction costs, their determinants, and other relevant controls. Using a panel of 136 countries from 2006 to 2019, I show that omitting transaction costs significantly overstates the effect of property rights. On average, roughly half of the positive coefficients attributed to property rights vanish once transaction costs are included. These results imply that property rights are not purely exogenous drivers of development but adapt to underlying market frictions. Stronger property protections do not always lead to better outcomes when transaction costs remain high. This suggests that reforms aimed at strengthening property rights should be coupled with efforts to reduce transaction costs, such as improving market transparency or regulatory efficiency. The findings offer new empirical support for the theory of endogenous property rights and highlight the importance of legal adaptability in institutional design. These findings are robust across multiple identification strategies.

Keywords: Property rights; Transaction costs; Economic outcomes; Innovation (search for similar items in EconPapers)
JEL-codes: D23 D40 O12 O47 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10101-025-00334-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:ecogov:v:26:y:2025:i:3:d:10.1007_s10101-025-00334-2

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10101/PS2

DOI: 10.1007/s10101-025-00334-2

Access Statistics for this article

Economics of Governance is currently edited by Amihai Glazer and Marko Koethenbuerger

More articles in Economics of Governance from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().