Exchange Efficiency with Weak Property Rights

Bar‐Gill, Oren; Persico, Nicola

doi:10.2139/ssrn.2161659

Cited by 7 publications

(1 citation statement)

References 68 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Of course, in practice, the relationship between property rights and economic prosperity can be more complex than this. For example, one strand of literature highlights that weaker property rights can be optimal for certain types of economies and market conditions (Ayotte & Bolton, 2011; Bar‐Gill & Persico, 2012; Jordan, 2006; Piccione & Rubinstein, 2007; Suzuki, 2020). While we recognize such possibilities, we have chosen not to explore them to keep the focus on the issues that are central to this paper.…”

Section: Discussionmentioning

confidence: 99%

Endogenous property rights, credit market, and economic development

Bose,

Cothren,

Sedaghatkish

2024

J Public Economic Theory

View full text Add to dashboard Cite

Empirical evidence suggests that credit markets can catalyze property rights reforms. We illustrate this in a theoretical framework where a borrower must expend costly effort to protect output from predation. We consider two possible equilibrium loan contracts. In the first, lenders leave the decision to protect output to borrowers. In the second, lenders set the standard of property protection as a precondition for lending. The second contracting regime results in a higher level of property rights enforcement. Significantly, the level of economic development determines the equilibrium contracting form and vice versa. Based on this analysis, we jointly determine the evolution of property rights and economic development. The analysis also sheds light on the environments that lead an economy to a low development trap with a poor quality of property rights institutions.

show abstract

Section: Discussionmentioning

confidence: 99%

Endogenous property rights, credit market, and economic development

Bose,

Cothren,

Sedaghatkish

2024

J Public Economic Theory

View full text Add to dashboard Cite

show abstract

The Property-Contract Balance

Dari‐Mattiacci¹,

Guerriero

Huang³

2016

JITE

View full text Add to dashboard Cite

We identify a key trade-off between protecting property rights and enhancing reliance on contracts. For instance, when a dishonest intermediary transfers a good to an innocent buyer without the owner's consent, should the buyer or the owner retain the good? We show that the optimal rule maximizes the agents' valuation of the good rather than their incentives to protect property and inquire about title. Furthermore, enhancing reliance on contracts is more appealing in countries where fewer intermediaries are honest and law enforcement is more efficient. This is consistent with novel comparative-law data on the acquisition of ownership over movables. (JEL: P14, L11, Z10, K11)

show abstract

The Good-Faith Purchaser: Markets, Culture, and the Legal System

2012

View full text Add to dashboard Cite

A key institutional setting is the set of rules balancing the use of coercion to the one of markets for transferring property rights. Even if all legal systems forbid theft ex ante, different societies provide different ex post solutions to the conflict arising between the original owner and the good-faith buyer of a good with defective title. These rules range from the full protection of the original owner's property right to the full protection of the buyer's reliance on contract. Looking at a world in which only intermediaries can transfer goods from original owners to buyers by using either coercion or markets, we prove that: 1. Society should accept coercion, if buyers value the good more than original owners, and minimize it, otherwise; 2. In the first of the two cases, provided that the preference polarization is not too wide, there are separating equilibria in which moral intermediaries-i.e., those for whom coercion entails a sufficiently high moral cost-signal their proper title by charging higher prices; 3. In the second of the two cases, the market shrinks because moral intermediaries refrain from coercion. Thus, mature economies-i.e., those in which original owners tend to value goods more than buyers-will move toward buyer protection, the higher is the share of moral intermediaries (lower is the quality of the legal system) because of the lower extent of coercion (lower impact of public enforcement). Estimates, based on a panel of 148 countries over the 1981-2011 period, are consistent with this prediction.

show abstract

Exchange Efficiency with Weak Property Rights

Cited by 7 publications

References 68 publications

Endogenous property rights, credit market, and economic development

Endogenous property rights, credit market, and economic development

The Property-Contract Balance

The Good-Faith Purchaser: Markets, Culture, and the Legal System

Contact Info

Product

Resources

About