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Property Is Not Just a Bundle of Rights

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  • Henry E. Smith

Abstract

This essay contrasts the bundle-of-rights picture of property unfavorably with an architectural or modular approach. The bundle is a legacy of Legal Realism and wrongly obscures the costs of delineating property. The bundle treats property as too unstructured, its constituent rights as too separable, and its features as too divisible. By contrast, the architectural approach emphasizes the distinction between our interests in using things and the legal interests property law defines to protect them. Delineation strategies in our world of positive transaction costs start with shortcut exclusion strategies and, for some important use conflicts, shifts over to governance strategies in which rules and doctrines are more transparent to purposes. The architectural approach captures how rights to exclude, residual claims, and running to successors follow automatically from the basic setup--without being absolute. The essay ends with a discussion of why the bundle of rights has been speciously attractive and indicates the wider stakes for the role of baselines in private law.

Suggested Citation

  • Henry E. Smith, 2011. "Property Is Not Just a Bundle of Rights," Econ Journal Watch, Econ Journal Watch, vol. 8(3), pages 279-291, September.
    • Handle: RePEc:ejw:journl:v:8:y:2011:i:3:p:279-291
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    References listed on IDEAS

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    1. Langlois, Richard N., 2002. "Modularity in technology and organization," Journal of Economic Behavior & Organization, Elsevier, vol. 49(1), pages 19-37, September.
    2. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    3. Dagan, Hanoch, 2011. "Property: Values and Institutions," OUP Catalogue, Oxford University Press, number 9780199737864, Decembrie.
    4. Smith, Henry E, 2002. "Exclusion versus Governance: Two Strategies for Delineating Property Rights," The Journal of Legal Studies, University of Chicago Press, vol. 31(2), pages 453-487, June.
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    Cited by:

    1. Rossi, Enrico, 2020. "Reconsidering the dual nature of property rights: personal property and capital in the law and economics of property rights," LSE Research Online Documents on Economics 105840, London School of Economics and Political Science, LSE Library.
    2. Henry E. Smith, 2019. "Complexity and the Cathedral: making law and economics more Calabresian," European Journal of Law and Economics, Springer, vol. 48(1), pages 43-63, August.

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    More about this item

    Keywords

    Property; bundle of rights; exclusion; legal realism; law and economics;
    All these keywords.

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • K1 - Law and Economics - - Basic Areas of Law

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