Topics in the economic analysis of property rights

Alfredo Canavese

Revista de Economía Política de Buenos Aires, 2007, issue 1, 31-36

Abstract: This paper applies microeconomic tools to assess the effect of the existence of property rights on the efficiency of resource allocation. The concepts of Pareto efficiency and Kaldor-Hicks efficiency are remembered, complete property rights are defined and its existence is justified by proving that they induce rational behavior that leads to an efficient resource allocation.Then, it is remarked that property rights are intended to internalize externalities and it is rigorously proved that when the structure of property rights prevents this, resources are either excessively exploited or under-exploited. The paper concludes by showing that only when complete property rights are granted (use and exclusion), all externalities are internalized and resources are efficiently exploited.

Keywords: property; rights (search for similar items in EconPapers)
Date: 2007
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