 Augmenting the Value of Ownership by Protecting It Only Partially: The "Market-Overt" Rule RevisitedBarak Medina The Journal of Law, Economics, and Organization, 2003, vol. 19, issue 2, 343-372 Abstract: This article analyzes alternative rules for settling conflicts between right owner and a bona fide purchaser. The optimal rule, so it is argued, is the one which maximizes the expected value of the ownership right, given the risk of right violation. In order to maximize this value, one must seek to both mitigate the risk of right violation and augment a potential buyer's willingness to pay for the right. The analysis specifies the relevant parameters that define which rule is optimal in given circumstances, and proves that there are cases in which the value of the ownership right is maximized if the owner's right is only partially protected against innocent third parties. Two prevailing notions are challenged: first, that the "market-overt" rule necessarily induces buyers to invest fewer resources in prepurchase precautions, and second, that a buyer's willingness to pay is unaffected by the choice of the legal rule. Copyright 2003, Oxford University Press. Date: 2003 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oup:jleorg:v:19:y:2003:i:2:p:343-372 Ordering information: This journal article can be ordered from Access Statistics for this article The Journal of Law, Economics, and Organization is currently edited by Andrea Prat More articles in The Journal of Law, Economics, and Organization from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.