Competing for Claims to Property

Stergios Skaperdas and Constantinos Syropoulos ()

No 85, CESifo Working Paper Series from CESifo

Abstract: Existing work on the costs of insecure property has largely focused on the overexploitation problem of common pool resources. We investigate other costs of insecure resources including uncertainty costs, lack of tradeability,and conflict - within a setting in which adversaries compete for claims to an insecure resource by making choices between production and appropriation. We also examine the different types of regimes or conventions about settling disputes that can arise in our setting: winner-take-all conflict; contracting to divide the contested resource; and contracting to divide the resource with the possibility of trade in other commodities. We find conditions under which insecure property can lead one or more agents to ex ante prefer not to trade and thus have an incentive to commit not to trade. For each regime we consider, we derive comparative static results and show how, regardless of the regime, claims to property systematically vary with the characteristics of the adversaries.

Date: 1995
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