Economic Analysis of Property Rights

This book deals with the economic sense of property rights, in other words, "who owns what?". Property rights are not defined uniformly across cultures since societies have discretion as to how to define those rights. In fact, they are very often not perfectly delineated. People can delineate those rights under the shadow of the law or ask a court to settle their case. The common view that commodities are homogenous entities with only one attribute gives rise to the conclusion that the right is either owned by someone or not owned. In real life, assets incorporate several attributes, whose ownership is not always perfectly delineated. Under certain circumstances it is too costly to measure and protect all assets' attributes. When circumstances change, conflicts can arise. Neoclassical literature instead assumes simplistically that transaction costs are zero and that all property rights are perfectly well delineated. Once you can take into consideration intermediate cases (common and private goods, environment, contractual rights etc) as Barzel does in this book, you can have a more complete model to price goods, which come logically from well-defined first principles. A must read for public economists and (why not?) lawyers.

This book is written from the neoclassical perspective and takes a sensible and thoughtful approach to property rights. This book provides the reader insight into how property rights define how society organizes itself. Building on Public Choice Theory, Barzel explores how property rights are delineated in many situations, addressing head on the Tragedy of the Commons. For any study of law and economics this is a must read. But the reader must be cautioned that this is not an Economics 101 book. A solid grounding in the writings of Buchanan, Tullock, Arrow, Ostrum, Coase, and Olson are what is required to make this a comprehensible read.

This book, unlike many other books on new institutional economics, constructed some scientific theories on property right economics. It should be a suitable basis of learning scientific new insitutional economics. Once you have read this book, you will know the correct meaning of economics of property rights.