Wednesday, July 25, 2012

Fitzpatrick on the Benefits of Complex Property Rules in Frontier Societies

FitzpatrickDaniel Fitzpatrick (Australia National University) has posted First Possession at the Frontier: Property and the Problem of Social Order on SSRN.  Here's the abstract:

Information cost theories of property suggest a baseline preference for bright-line rules of first possession as interpretive simplicity reduces the costs of information transmission to a broad property audience. A baseline preference for simplicity allows for rule complexity where increases in the cost of information are outweighed by reductions in deadweight losses. This article suggests that rule complexity may correlate with reductions in deadweight losses through maintenance of social order, at least in 'frontier’ contexts where there are risks of violent acts of property encroachment. At the frontier, where the costs of state enforcement outweigh the benefits, the lowest objective sum of transaction costs may be provided by complex rules of first possession that reduce the enforcement costs of property. Complexity may take the form of rules of abandonment, restrictions on claimant eligibility, or distinctions between actual and legal possession. The argument is illustrated by reference to East Timor, which provides an unusual opportunity to analyze the emergence of institutional complexity relating to property, both in circumstances of custom without law and in the context of land law in a new nation-state.

Steve Clowney

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