Property as sequential exchange: The forgotten limits of private contract

Benito Arruñada
Authors registered in the RePEc Author Service: Benito Arruñada

No 948, Working Papers from Barcelona School of Economics

Abstract: The contractual, single-exchange framework in Coase (1960) contains the implicit assumption that exchange in property rights does not affect future transaction (i.e., trading) costs. This is pertinent for analyzing use externalities but limits our understanding of property institutions: a central problem of property markets lies in the interaction among multiple transactions, which causes exchange-related and non-contractible externalities. By retaining a single-exchange simplification, the economic analysis of property has encouraged views that: (1) overemphasize the initial allocation of property rights, while some form of recurrent allocation is often needed; (2) pay scant attention to legal rights, although these determine enforceability and, therefore, economic value; and (3) overestimate the power of unregulated private ordering, despite its inability to protect third parties. These three biases have been misleading policy in many areas, including land titling and business firm formalization

Keywords: transaction costs; Externalities; enforcement; Property rights; impersonal exchange; public ordering; private ordering; organized markets; blockchain (search for similar items in EconPapers)
JEL-codes: D23 G38 H41 K11 K12 L85 O17 P48 (search for similar items in EconPapers)
Date: 2017-01
New Economics Papers: this item is included in nep-cta and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Property as sequential exchange: the forgotten limits of private contract (2017)
Working Paper: Property as sequential exchange: The forgotten limits of private contract (2017)
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