The Creation of Effective Property Rights / Herschel I. Grossman.

Format:

Book

Author/Creator:

Grossman, Herschel I.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w7897.

NBER working paper series no. w7897

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2000.

Summary:

Traditionally, general-equilibrium models have taken effective property rights to be given and have been concerned only with analysing the allocation of resources among productive uses and the distribution of the resulting product. But, this formulation of the economic problem is incomplete because it neglects that the appropriative activities by which people create the effective property rights that inform allocation and distribution are themselves an alternative use of scarce resources.This paper develops two canonical general-equilibrium models of resource allocation and income distribution that allow for the allocation of time and effort to the creation of effective property rights to valuable resources. In one model the valuable resources are initially in a common pool. In the other model agents initially have nonoverlapping claims to the valuable resources. For both models the analysis reveals how the amount of time and effort that agents allocate to the creation of effective property rights, rather than to production,depends on the environment for creating effective property rights, on the technology of production, and on the scale of the economy. The paper also analyses the security of initial claims to valuable resources and speculates about why initial claims sometimes are perfectly secure.

Notes:

Print version record

September 2000.