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Abstract:
Due to the high transaction cost that would be necessary for large numbers of people to negotiate with each other, even those who are sanguine about private markets become reserved when externalities affect large populations. The distinction between private and societal interest is well understood for pecuniary externalities, but neglect of Buchanan and Stubblebine's article Externality has left the same distinction widely unrecognized for non-pecuniary ones. If only a few parties on either side experience a relevant externality within Buchanan and Stubblebine's relevant/irrelevant distinction, private interactions can appropriately internalize costs and benefits across the entire population. Regardless of the perceptiveness of legal and cultural institutions in placing entitlements, and regardless of the level of transaction cost among the universe of the affected, a surprising number of externalities will readily fix themselves. The desirability of corrective intervention is much too easily conceded.

externality, externalities, positive externality, positive externalities, negative externality, negative externalities, relevant externality, irrelevant externality, relevant externalities, irrelevant externalities, Coase theorem, transaction cost, environment, amenities, collective goods, public goods, private goods, exclude, Nirvana fallacy, public policy, environmental policy, free rider, existence value, option value, Pigou, Pigouvian tax, Pigouvian subsidy, national park, strategic behavior, free market environmentalism, resource, misallocation, consumer surplus, producer surplus, pollution, Ronald Coase, James Buchanan, Stubblebine

Abstract:
The "law of one price" defines a market as the geographic area within which the same thing is sold for the same price at the same time, allowance being made for transportation costs. This paper shows that as usually stated the law of one price actually has two plausible interpretations. The law might mean that a market can be defined as the economic space wherein prices differ only by transportation costs. Alternatively, the law might mean that a market, once defined by some other criterion, will exhibit prices differing only by transportation costs. Under the first definition of the law, however, every production site is a market. Under the second definition, prices in fact do not differ by transportation costs. For market definition purposes, the law of one price is therefore either useless or wrong, depending on how it is interpreted.

Abstract:
A bilateral danger of underperformance exists when two parties sink investments with payoffs dependent on the behavior of the other. There are five general categories of defense against that danger: (1) Legal action against a misbehaving co-investor; (2) Reliance on a reputation for non-opportunistic behavior; (3) Agreement by the party with the less substantial reputation to modify the relative payouts, thus paying the partner a risk premium; (4) Vertical integration that makes a partnership unnecessary; and (5) Forgoing the opportunity altogether. A sovereign can be sued only if it permits that outcome, and must invest in a reputation that assures the partner that it will permit suit. Thus, for a sovereign the first two categories merge. Such a reputation can arise from a history of successful meritorious suits by aggrieved co-investors. But many tribal reservations are small and poor, offer few attractive investment opportunities, and hence exhibit thin histories on point. Consequently they more often pay high risk premiums than similar non-tribal investors, more often vertically integrate where others rely on experts, and more often forego potentially valuable investments altogether. We explore ways to ameliorate those disadvantages and thus improve returns from assets held by or on reservations.

tribal economic development, reservation economic development, American Indian economic development, institutions for economic development

Abstract:
The plague visited unprecedented mortality on Europe for centuries, shifting the relative values of production inputs. It also changed the costs and benefits of defining and enforcing property rights. We develop a new property rights model to explain the decline in value of non-human factors of production, as well as the pattern and timing of land abandonment. Our model extends property rights theory by explicitly incorporating the range of common claims between open access and pure private property. Due to title enforcement costs, explicit claims on some non-human factors lapsed, even though communities continued to use the factors informally, in a commons framework. The marginal value of labor and human capital, in contrast, rose, placing insupportable stress on feudal institutions. The evolution of workers' rights over their own labor culminated in the subsequent disappearance of serfdom. Thus the Black Death illustrates how a demographic change induces evolutionary institutional change.

Property rights, demographic change, evolutionary institutional change, epidemic, open access, commons, communal property, privatization, serfdom, feudal institutions, Black Death, plague