Asset Mobility and Property Rights

How does asset mobility affect the provision of property rights? Existing research anticipates that firm owners with mobile assets are effective at pressuring the government for property rights. In this research note, I examine not just the influence of firm owners but also their preferences. I develop a formal model to show that owners of mobile assets, who may move their assets out of the government’s reach, have less to gain from property rights enforcement than owners with less mobile assets. Moreover, once one considers heterogeneous firms competing with one another, firms with more mobile assets may gain a competitive advantage from policies that are disproportionately costly for their competitors (like violations of property rights). I evaluate the model propositions drawing on empirical analyses of survey data from business executives in Latin America and cross-national, time-series data on firm profits. The findings from Latin America show that business executives with less mobile assets report greater need for property rights improvements. Cross-nationally, property rights increase the profits of firms, but the effects are confined to firms with substantial immobile assets. These findings are consistent with the smaller benefits of property rights among firms with more mobile assets. The research note unites the literatures on heterogeneous firms and the development of property rights to challenge the conventional wisdom about how asset mobility affects property rights.