Traditionally, general-equilibrium models have taken effective property rights to be given and have been concerned only with analysing the allocation of resources among productive uses and the distribution of the resulting product. But, this formulation of the economic problem is incomplete because it neglects that the appropriative activities by which people create the effective property rights that inform allocation and distribution are themselves an alternative use of scarce resources.This paper develops two canonical general-equilibrium models of resource allocation and income distribution that allow for the allocation of time and effort to the creation of effective property rights to valuable resources. In one model the valuable resources are initially in a common pool. In the other model agents initially have nonoverlapping claims to the valuable resources. For both models the analysis reveals how the amount of time and effort that agents allocate to the creation of effective property rights, rather than to production,depends on the environment for creating effective property rights, on the technology of production, and on the scale of the economy. The paper also analyses the security of initial claims to valuable resources and speculates about why initial claims sometimes are perfectly secure.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
7897.
Length: Date of creation: Sep 2000 Date of revision: Handle: RePEc:nbr:nberwo:7897
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Find related papers by JEL classification: D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
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Grossman, Herschel I., 1995.
"Insurrections,"
Handbook of Defense Economics,
in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 8, pages 191-212
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Konrad, Kai A & Skaperdas, Stergios, 1998.
"Extortion,"
Economica,
London School of Economics and Political Science, vol. 65(260), pages 461-77, November.
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