University of Illinois
Economic Inquiry, Vol. 47, Issue 2, pp. 377-393, April 2009
We model the development of property rights as an endogenous process, driven by capital accumulation. Property rights internalize the portion of the return to capital that is otherwise treated as common property. This enclosure further encourages capital accumulation and sustains economic growth. We view effective property rights as multilateral agreements among agents that can only be implemented and sustained when agents are sufficiently patient. Patience is determined by the marginal product of capital; the marginal product of capital shrinks, and consequently patience increases, as capital grows. Hence, property rights can be established only when an economy is rich enough.
Number of Pages in PDF File: 17
JEL Classification: P14, O11, C73Accepted Paper Series
Date posted: June 16, 2009
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo6 in 0.750 seconds