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The fundamental Coase of development: property rights foundations of the effective state

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  • Piano, Ennio E.
  • Salter, Alexander W.

Abstract

This paper identifies political property rights and jurisdictional rivalry as two important mechanisms that drive political and economic development. After developing a general framework to explain relative performance in the ‘market for governance’, we argue that Western Europe during the High Middle Ages presented initial conditions conducive to the development of effective states. We extend the framework by analyzing city-state governance in Renaissance Italy, as well as public finance practices in early modern Germany. We conclude by discussing the implications of our argument for the literature on state capacity and economic development. The takeaway is that well-aligned political property rights and competition in the provision of governance services can promote the protective and productive state while forestalling the predatory state.

Suggested Citation

  • Piano, Ennio E. & Salter, Alexander W., 2021. "The fundamental Coase of development: property rights foundations of the effective state," Journal of Institutional Economics, Cambridge University Press, vol. 17(1), pages 37-52, February.
    • Handle: RePEc:cup:jinsec:v:17:y:2021:i:1:p:37-52_3
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    Cited by:

    1. Dario Maimone Ansaldo Patti & Pietro Navarra & Giuseppe Sobbrio, 2022. "Insecure Property Rights and Conflicts: How to Solve Them?," Mathematics, MDPI, vol. 11(1), pages 1-32, December.
    2. Rui Wang & Qianmao Zhu & Matthew Noellert, 2024. "Weak central government, strong legal rights: the origins of divergent legal institutions in 18th-century Chinese and Japanese rice markets," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.
    3. Vincent Geloso, 2022. "Statogenic climate change? Julian Simon and Institutions," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 35(3), pages 343-358, September.

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