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On the Dual Nature of Weak Property Rights

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  • Louis Hotte

    ()
    (Department of Economics, University of Ottawa, Ottawa, ON)

  • Randy McFerrin

    ()
    (New Mexico State University, U.S.A.)

  • Douglas Wills

    ()
    (University of Washington)

Abstract

In the natural resource literature, convertional wisdom holds that weak property rights will cause a resource to be over-exploited. This is because weak property rights are typically perceived as a problem of input exclusion. In this paper, we first present evidence to the effect that weak property rights often take the form of contestable output- or output theft - and that this has an impact or resource use. We then propose a theoretical model of natural resource use under generally weak prperty rights - or weak state presence - when resource users face the dual problem of input exclusion output appropriation. We show that introducing the possibility that outputs can be contested acts as an output tax, with the added twist that resource users effectively determine the level of the tax. This tax has a depressive effect on input use. As a result, whether the resource is under-or over-exploited in equilibrium will depend on the relative severity of output appropriation and input exclusion problems when property rights are generally weak.

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Bibliographic Info

Paper provided by University of Ottawa, Department of Economics in its series Working Papers with number 1103E.

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Length: 31 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:ott:wpaper:1103e

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Keywords: Natural Resources; Property Rights; Trespass; Theft; Over-Exploitation; Under-Exploitation;

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References

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  1. Skogh, Goran & Stuart, Charles, 1982. " A Contractarian Theory of Property Rights and Crime," Scandinavian Journal of Economics, Wiley Blackwell, vol. 84(1), pages 27-40.
  2. Libecap, Gary D., 1978. "Economic Variables and the Development of the Law: The Case of Western Mineral Rights," The Journal of Economic History, Cambridge University Press, vol. 38(02), pages 338-362, June.
  3. Robin Brooks & Michael Murray & Stephen Salant & Jill C. Weise, 1999. "When Is the Standard Analysis of Common Property Extraction under Free Access Correct? A Game-Theoretic Justification for Non-Game-Theoretic Analyses," Journal of Political Economy, University of Chicago Press, vol. 107(4), pages 843-858, August.
  4. Ambec, S. & Hotte, L., 2003. "On the redistributive impact of privitazing a resource under imperfect enforcement," Working Papers 200302, Grenoble Applied Economics Laboratory (GAEL).
  5. Besley, Timothy & Ghatak, Maitreesh, 2010. "Property Rights and Economic Development," Handbook of Development Economics, Elsevier.
  6. Besley, Timothy J. & Persson, Torsten, 2009. "State Capacity, Conflict and Development," CEPR Discussion Papers 7336, C.E.P.R. Discussion Papers.
  7. Clotfelter, Charles T, 1977. "Public Services, Private Substitutes, and the Demand for Protection against Crime," American Economic Review, American Economic Association, vol. 67(5), pages 867-77, December.
  8. Hotte, Louis, 2001. "Conflicts over property rights and natural-resource exploitation at the frontier," Journal of Development Economics, Elsevier, vol. 66(1), pages 1-21, October.
  9. Libecap, Gary D & Wiggins, Steven N, 1984. "Contractual Responses to the Common Pool: Prorationing of Crude Oil Production," American Economic Review, American Economic Association, vol. 74(1), pages 87-98, March.
  10. GAUDET, GĂ©rard & MOREAUX, Michel & SALANT, Stephen W., 1997. "Private Storage of Common Property," Cahiers de recherche 9704, Universite de Montreal, Departement de sciences economiques.
  11. Fafchamps, Marcel & Minten, Bart, 2006. "Crime, Transitory Poverty, and Isolation: Evidence from Madagascar," Economic Development and Cultural Change, University of Chicago Press, vol. 54(3), pages 579-603, April.
  12. Erik Bryld, 2003. "Potentials, problems, and policy implications for urban agriculture in developing countries," Agriculture and Human Values, Springer, vol. 20(1), pages 79-86, March.
  13. McFerrin, Randy & Wills, Douglas, 2007. "High Noon on the Western Range: A Property Rights Analysis of the Johnson County War," The Journal of Economic History, Cambridge University Press, vol. 67(01), pages 69-92, March.
  14. HOTTE, Louis, 1997. "Natural-Resource Exploitation with Costly Enforcement of Property Rights," Cahiers de recherche 9720, Universite de Montreal, Departement de sciences economiques.
  15. Francisco M. Gonzalez, 2005. "Insecure Property and Technological Backwardness," Economic Journal, Royal Economic Society, vol. 115(505), pages 703-721, 07.
  16. de Meza, David & Gould, J R, 1992. "The Social Efficiency of Private Decisions to Enforce Property Rights," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 561-80, June.
  17. Grossman, Herschel I & Kim, Minseong, 1995. "Swords or Plowshares? A Theory of the Security of Claims to Property," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1275-88, December.
  18. Hotte, Louis & Long, Ngo Van & Tian, Huilan, 2000. "International trade with endogenous enforcement of property rights," Journal of Development Economics, Elsevier, vol. 62(1), pages 25-54, June.
  19. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
  20. Ellis, Frank & Sumberg, James, 1998. "Food production, urban areas and policy responses," World Development, Elsevier, vol. 26(2), pages 213-225, February.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Property rights and natural resources
    by Economic Logician in Economic Logic on 2011-06-24 14:35:00

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