Wednesday, November 19, 2008
Lee Anne Fennell (Chicago) has posted Adjusting Alienability on SSRN. Here's the abstract:
In recent years, the right to exclude has dominated property theory, relegating alienability - another of the standard incidents of ownership - to the scholarly shadows. Law and economics has also long neglected alienability; despite the inclusion of inalienability rules in Guido Calabresi and Douglas Melamed's celebrated 1972 Harvard Law Review article, alienability restrictions have entered economic discussions mostly as anomalies, and usually in the company of an entitlement whose suitability for market transfer is hotly contested. In this paper, I explore inalienability rules as tools for achieving efficiency (or other ends) when applied to resources that society generally views as appropriate objects of market transactions. Specifically, I focus on inalienability's capacity to alter upstream decisions by would-be resellers about whether to acquire an entitlement in the first place. By influencing these acquisition decisions, inalienability rules can buttress or substitute for other adjustments to the property bundle in addressing resource dilemmas. Of particular interest is the possibility that limits on alienability could sidestep the holdout problems that have often spurred resort to liability rules, and could do so without interfering as profoundly with the owner's autonomy interests. While alienability limits carry well-known disadvantages, they might be structured in ways that would reduce those drawbacks. Recognizing the full potential of alienability limits in addressing resource dilemmas requires applying the same level of creativity to devising inalienability rules as has previously been applied to the design of liability rules.
I've heard Lee present this paper before, and it is excellent. A very important contribution to property theory.
[Comments are held for approval, so there will be some delay in posting]