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On the Dual Nature of Weak Property Rights

Author

Listed:
  • 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.

Suggested Citation

  • Louis Hotte & Randy McFerrin & Douglas Wills, 2011. "On the Dual Nature of Weak Property Rights," Working Papers 1103E, University of Ottawa, Department of Economics.
  • Handle: RePEc:ott:wpaper:1103e
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    References listed on IDEAS

    as
    1. Louis Hotte, 2005. "Natural-resource exploitation with costly enforcement of property rights," Oxford Economic Papers, Oxford University Press, vol. 57(3), pages 497-521, July.
    2. Timothy Besley & Torsten Persson, 2010. "State Capacity, Conflict, and Development," Econometrica, Econometric Society, vol. 78(1), pages 1-34, January.
    3. 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.
    4. Olaf J. de Groot & Matthew D. Rablen & Anja Shortland, 2011. "Gov-aargh-nance - "even criminals need law and order"," CEDI Discussion Paper Series 11-01, Centre for Economic Development and Institutions(CEDI), Brunel University.
    5. Besley, Timothy & Ghatak, Maitreesh, 2010. "Property Rights and Economic Development," Handbook of Development Economics, Elsevier.
    6. Francisco M. Gonzalez, 2005. "Insecure Property and Technological Backwardness," Economic Journal, Royal Economic Society, vol. 115(505), pages 703-721, July.
    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 867-877, December.
    8. 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.
    9. 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.
    10. 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.
    11. 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 1275-1288, December.
    12. Ellis, Frank & Sumberg, James, 1998. "Food production, urban areas and policy responses," World Development, Elsevier, vol. 26(2), pages 213-225, February.
    13. Gaudet, Gerard & Moreaux, Michel & Salant, Stephen W., 2002. "Private Storage of Common Property," Journal of Environmental Economics and Management, Elsevier, vol. 43(2), pages 280-302, March.
    14. Erik Bryld, 2003. "Potentials, problems, and policy implications for urban agriculture in developing countries," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 20(1), pages 79-86, March.
    15. Ambec, Stefan & Hotte, Louis, 2006. "On the redistributive impact of privatizing a resource under imperfect enforcement," Environment and Development Economics, Cambridge University Press, vol. 11(06), pages 677-696, December.
    16. 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.
    17. 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.
    18. 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.
    19. 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.
    20. Francisco M. Gonzalez, "undated". "The Use of Coercion in Society: Insecure Property Rights, Conflict and Economic Backwardness," Working Papers 2010-15, Department of Economics, University of Calgary, revised 09 Sep 2011.
    21. 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 561-580, June.
    22. 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.
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    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 19:35:00

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    Cited by:

    1. Alexandre CROUTZET & Pierre LASSERRE, 2016. "Optimal Completeness of Property Rights on Renewable Resources in Presence of Market Power," Cahiers de recherche 10-2016, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    2. Rodriguez Acosta, Mauricio, 2016. "Essays in political economy and resource economic : A macroeconomic approach," Other publications TiSEM 1e39ef1b-43a2-4f95-892c-6, Tilburg University, School of Economics and Management.
    3. Mauricio Rodriguez & Sjak Smulders, 2016. "Dynamic Resource Management under Weak Property Rights: A Tale of Thieves and Trespassers," CESifo Working Paper Series 6019, CESifo Group Munich.
    4. repec:eee:resene:v:49:y:2017:i:c:p:16-32 is not listed on IDEAS

    More about this item

    Keywords

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

    JEL classification:

    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • N50 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - General, International, or Comparative
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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