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Enforcement of Property Rights in a Barter Economy

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  • Hoffmann, Magnus

Abstract

If property rights to consumption goods are insecure, the incentives to trade in a barter economy are reshaped. In a pure exchange economy, we examine the case where two contestable consumption goods are vital to two agents and initial endowments follow a binary distribution. In line with the existing literature, we examine in a two-stage game how the equilibrium security of claims to property is determined. We find that, in equilibrium, two different regimes emerge, depending on the exogenous preference and appropriationeffectiveness parameters: Peaceful coexistence and trade and appropriation,with the former regime strictly Pareto-dominating the latter regime.

Suggested Citation

  • Hoffmann, Magnus, 2006. "Enforcement of Property Rights in a Barter Economy," MPRA Paper 3260, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:3260
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    References listed on IDEAS

    as
    1. James E. Anderson & Douglas Marcouiller, 2005. "Anarchy And Autarky: Endogenous Predation As A Barrier To Trade," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(1), pages 189-213, February.
    2. Skaperdas, Stergios, 1992. "Cooperation, Conflict, and Power in the Absence of Property Rights," American Economic Review, American Economic Association, vol. 82(4), pages 720-739, September.
    3. Herschel I. Grossman, 2001. "The Creation of Effective Property Rights," American Economic Review, American Economic Association, vol. 91(2), pages 347-352, May.
    4. Hirshleifer, Jack, 1991. "The Technology of Conflict as an Economic Activity," American Economic Review, American Economic Association, vol. 81(2), pages 130-134, May.
    5. Bush, Winston C. & Mayer, Lawrence S., 1974. "Some implications of anarchy for the distribution of property," Journal of Economic Theory, Elsevier, vol. 8(4), pages 401-412, August.
    6. Anderton, Charles H. & Carter, John R., 2008. "Vulnerable trade: The dark side of an Edgeworth box," Journal of Economic Behavior & Organization, Elsevier, vol. 68(2), pages 422-432, November.
    7. 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.
    8. Stergios Skaperdas & Constantinos Syropoulos, 2002. "Insecure Property and the Efficiency of Exchange," Economic Journal, Royal Economic Society, vol. 112(476), pages 133-146, January.
    9. Kjell Hausken, 2004. "Mutual Raiding of Production and the Emergence of Exchange," Economic Inquiry, Western Economic Association International, vol. 42(4), pages 572-586, October.
    10. Samuel Bowles & Herbert Gintis, 1993. "The Revenge of Homo Economicus: Contested Exchange and the Revival of Political Economy," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 83-102, Winter.
    11. Charles Anderton, 2000. "Exchange of goods or exchange of blows? New directions in conflict and exchange," Defence and Peace Economics, Taylor & Francis Journals, vol. 11(1), pages 55-71.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Barter Exchange; Contests; Security of Property Rights;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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