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On the Dual Nature of Weak Property Rights

  • Louis Hotte

    ()

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

  • Randy McFerrin

    ()

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

  • Douglas Wills

    ()

    (University of Washington)

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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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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  1. 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.
  2. Timothy J. Besley & Torsten Persson, 2009. "State Capacity, Conflict and Development," NBER Working Papers 15088, National Bureau of Economic Research, Inc.
  3. Ellis, Frank & Sumberg, James, 1998. "Food production, urban areas and policy responses," World Development, Elsevier, vol. 26(2), pages 213-225, February.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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.
  11. 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.
  12. 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.
  13. Besley, Timothy & Ghatak, Maitreesh, 2010. "Property Rights and Economic Development," Handbook of Development Economics, Elsevier.
  14. de Groot, Olaf J. & Rablen, Matthew D. & Shortland, Anja, 2011. "Gov-Aargh-Nance – “Even Criminals Need Law And Order”," NEPS Working Papers 7/2011, Network of European Peace Scientists.
  15. 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.
  16. 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.
  17. Francisco M. Gonzalez, 2005. "Insecure Property and Technological Backwardness," Economic Journal, Royal Economic Society, vol. 115(505), pages 703-721, 07.
  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. 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.
  20. 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.
  21. 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.
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