2. 02
The development and complication of
property relations in the conditions of a
modern market economy have
contributed to the fact that the legal and
economic aspects of the property
problem have “closed” in the emerging
theory of property rights. Its occurrence
is associated with the name of the
American neo-institutionalist economist
Robert Coase, who in 1991 became the
Nobel laureate and A. Alchian. As an
independent section of economic
analysis, the theory of property rights
developed in the 60-70s.
3. 03
Property rights are understood in it as the
norms sanctioned by society governing access to
rare resources. The concept of property rights is
directly connected with the central problem of
economic science - the problem of rarity, since
their establishment makes sense only
concerning rare (limited) resources.
4. According to existing definitions, property rights can extend to both physical
and incorporeal objects (for example, the results of intellectual activity). At
the same time, the behavioral significance is attributed to them: acting as
incentives, they encourage some behaviors and suppress others (through
prohibitions or cost increases).
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It is also emphasized that property rights can be
protected not only by the state but also by other
social mechanisms - customs, moral principles,
religious commandments.
5. The theory of property
rights proceeds from
the notion that any
act of exchange is
essentially an
exchange of bundles
of a warrant. Such an
interpretation
suggests that the
wider the set of
warrant assigned to a
resource, the higher
its value.
The main elements of a bundle of
property rights usually include:
the right to exclude other agents from
access to the resource;
the right to use the resource;
the right to receive income from it;
the right to transfer all previous
powers.
6. A necessary condition for the effective
operation of the market is the exact
definition, or specification, of property
rights. As property rights theorists point
out, the specification pushes economic
agents to make the most effective
decisions: the more clearly defined and
more secure are the rights of the owners,
the closer is the relationship between the
actions they take and their well-being.
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7. The opposite phenomenon - the erosion
of property rights - occurs when they are
inaccurately established and poorly
protected, or they are subject to various
kinds of restrictions by the state. However,
the theory of property rights recognizes
that no rights can be fully defined and
reliably protected since their specification
is not free. Its accuracy, therefore, depends
on the balance of benefits and costs
associated with the establishment and
protection of various types of property
rights.
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8. 08 The channel through which they are
transmitted is contracts. This is another key
term in property rights theory. Contracts fix
which powers and on what conditions are
subject to transfer. According to the theory of
property rights, in which a variety of contract
forms have become the subject of active study,
the choice of the type of contract is dictated
by considerations of saving transaction costs.
The connection between the concepts of
property rights, transaction costs, and
contractual relations is revealed by the Coase
Theorem, which forms the theoretical
foundation of the theory of property rights
and, more broadly, of the entire neo-
institutional direction.
9. One of the leading provisions of the theory of
property rights is the “Coase theorem,” which
is also called the “Coase – Stigler theorem,”
since it is J. Stigler who owns the first clear
statement of this theorem - at zero transaction
costs and a clear establishment of property
rights, regardless of how these property rights
are distributed among economic entities,
private and social costs will be equal.
Coase's theorem
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10. 10
In other words, the efficient allocation of resources will be achieved
regardless of the distribution of ownership of these resources, it is
enough that the costs of establishing and protecting property rights,
negotiating and securing agreements for the redistribution of these
rights are small. Based on such negotiations, all previously
unaccounted for in market calculations resources receive a monetary
value, and the economic entity to whom this is most beneficial
becomes their owner (or remains).
11. 11
Analysis of Alternative Ownership
Systems
An important place in the theory of property rights
belongs to a comparative analysis of various legal
regimes. She identified three main systems of
property rights - private, public and state. In
conditions of private ownership, everyone except
the owner is excluded from access to the resource:
he decides how to use and on what conditions to
transfer his powers.
12. 12
Private property is the basis of a market
economy; it involves securing the right to
dispose and control economic benefits for
individuals or groups of individuals.
Starting with Aristotle, all authors writing
about private property noted the
interdependence between private
property and effective incentives: “Private
property is rooted like man, in his love for
himself”
13. The obvious drawback of private property is that its
formation becomes a condition for the emergence
and deepening of inequality.
The effective functioning of private property is possible only on
the condition of its specification, that is, with a clear definition of
the boundaries of its powers, formal and informal rules and a
mechanism for monitoring their compliance.
14. 14
In a public property system, access is open to all, but since the supply
of most resources is limited, the principle of "first borrowed, first used."
15. State ownership formally acts as
the property of all members of
society. However, the exercise of
property rights is carried out by
the state apparatus, which should
ensure the balance of the socio-
economic interests of all
segments of the population, but
in fact, contributes to the
realization of the interests of the
state bureaucracy.
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16. 16
However, in some types of activities, state ownership seems to
be the only possible one, first of all, the activities of natural
monopolies or the functioning of state-owned enterprises in
areas that are not profitable but produce socially significant
products.
In the theory of property rights, none of them are endowed with any
absolute advantages.
17. The study of the relationship of property rights with
transaction costs, the characteristic of the
comparative effectiveness of various legal regimes,
the analysis of various organizational forms based
on the characteristics of the distribution of powers
within them has become recognized achievements
of the theory of property rights. Having made the
subject of research the interaction of the economic
and legal systems of society, it has significantly
enriched modern economic science.
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