Theory of disposition rights
The theory of property rights (also available legal theory , Eng. Property rights theory ) as a branch of New Institutional Economics studied (property rights, action and property rights property rights ) of goods.
Rights of disposal
The theory of rights of disposal distinguishes the following rights of disposal ( examples for a car ):
- usus : the right to use something ( the right to drive a car );
- usus fructus : the " right of fructification "; the right to retain the income associated with the use of the property, as well as the obligation to bear losses ( the right to receive the income from the rental );
- abusus : the right to change the shape and appearance of the thing ( the right to repaint the car , but also the right to kick a bump in the car out of anger );
- ius abutendi : the right to total about the matter or in part, have to withhold and the capital gain ( the right to sell the car and gain ownership of them to a third party ).
From an economic point of view, the value of a good is not only determined by its substance ( what is it ), but above all by the possible uses of the good ( what can I do with it ). For example, a plot of land in the best location is worth significantly less if the building permit is denied.
Rights of disposal and external effects
- At the beginning of the 18th century, the Montagnais Indians knew no hunting restrictions, everyone could hunt as much as they wanted. Because of the large game population and the relative uselessness of excessively hunted animals, this did not lead to major problems, although no individual rights of disposal were specified. However, when the colonialists asked for beaver pelts from the Indians , the value of the beavers rose so much that the intensification of hunting led to a decline in the population. Due to the structure of the rights of disposal, no one was interested in individual restrictions on hunting to secure the animal population (so-called tragedy of the commons ).
- The problem here is the divergence between private costs or benefits and social costs or benefits : The benefits from the individual animal benefit the hunter individually, but the costs from the decline in the population must be borne by the community as a whole, not just the individual hunter.
- So the community could expect an improvement in its situation if the externalities were internalized by a change in the property structure. This was successfully achieved through the allocation of individual territories to the families, so that individual incentives were created to plan for the long term by considering the animal population.
Freedom and rights of disposal
As you can see from the example with the Indians, clear rights of disposal are a prerequisite for economic growth through investment . Based on Thomas Hobbes , James M. Buchanan explains the consequences of a lack of a legal system: If there are no defined and enforced rights of disposal, there is hardly any incentive to invest (in the example above: consideration for the animal population, somewhat more progressive, perhaps, beaver breeding), there no one can be sure of getting the benefit (the fruits, usus fructus) of these investments. The Indian family without rights of disposal runs the risk of another family killing the animals they protect, so they will either not “invest” in the first place and, for example, hunt young animals themselves, or they will have to pay extremely high costs to protect their investment ( Guarding, fighting etc.).
The definition and enforcement of rights of disposal are therefore in the common interest of all, even if it is still in the individual interest not to adhere to them (i.e. not to invest and go on a rampage). There is a second-order public good problem because it:
- It is collectively better if everyone adheres to the distribution of rights of disposal, but individually it is better not to adhere to it.
- It is in the collective interest to punish lawbreakers in order to enforce the rights of disposal, but in the individual interest not to share in the costs of the punishment or enforcement.
Changes in the distribution of rights of disposal
As can be seen from the example of Demsetz above, distribution of rights of disposal is not immutable. As soon as new, previously unknown externalities arise, there is pressure to adapt , so that the changed distribution of rights of disposal internalizes these externalities. This does not run smoothly , there are mostly transaction costs , for example the Indian families have to sit down and discuss the change and the like. Therefore, one has to weigh between:
- the benefits of the previous structure of the rights of disposal, the transaction costs of a change on the one hand
- the added benefit of a change in the distribution of rights of disposal on the other hand
It does not always have to be government intervention that regulates changes in the distribution of rights of disposal. If there is already a complete assignment of the right of disposal, market mechanisms can also react to new external effects.
Rights of disposal to goods are transferred through contracts . If new external effects would lead to a loss of welfare , a solution that serves the common interest of all can also be found through negotiated solutions between the parties involved; the previous distribution of the rights of disposal (as long as they are fully assigned) does not matter. Provided that there are no transaction costs (here above all: that the parties can negotiate free of charge), every complete distribution of rights of disposal is efficient (see Coase theorem ).
As soon as transaction costs exist, however, a trade-off occurs between full allocation and enforcement of the rights of disposal (external effects decrease, transaction costs increase) and a diluted structure of rights of disposal (more external effects, fewer transaction costs). This is also important for the allocation of rights of disposal in non-governmental organizations such as companies.
If transaction costs are present, the state does not have to set authoritarian rights of disposal or internalize external effects; it can also reduce the transaction costs by restructuring institutions to such an extent that negotiated solutions can be found again. Examples of different state interventions to internalize external effects in the environmental sector include:
- Ecological tax : A Pigou tax makes energy consumption more expensive.
- Emission rights trading : By allocating a certain amount of emission rights and providing a market for these rights, the manufacturing companies will independently change the distribution of rights of disposal through negotiated solutions.
- H. Demsetz: Toward a Theory of Property Rights. In: American Economic Review . 57, 1967, pp. 347-359.
- M. Erlei, M. Leschke, D. Sauerland: New Institutional Economics. 1999, p. 307.
- A. Picot, H. Dietl, E. Franck: Organization. 2002.
- James M. Buchanan : The Limits of Freedom. Between anarchy and Leviathan. Mohr Siebeck, Tübingen 1984, ISBN 3-16-944870-6 .
- Ronald Coase : The Problem of Social Cost. In: Journal of Law and Economics. 3, 1960, pp. 1-44.
- Harold Demsetz : Toward a Theory of Property Rights. In: American Economic Review. 57, 1967, pp. 347-359.
- Helmut Dietl, Remco van der Velden: Property Rights Theory. In: Georg Schreyögg, Axel von Werder (ed.): Concise dictionary of corporate management and organization. 4th edition. Schäffer-Poeschel, Stuttgart 2004, Sp. 1566-1572.
- Mathias Erlei, Martin Leschke, Dirk Sauerland: New Institutional Economics. Schäffer-Poeschel, Stuttgart 2007, ISBN 978-3-7910-2296-3 .
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- Manfred Tietzel: The Economy of Property Rights: An Overview. In: Journal for Economic Policy. 30, 1981, pp. 207-213.