The State's Enforcement Monopoly and the Private Protection of Property
Kristoffel R. Grechenig
Max-Planck-Institute for Research on Collective Goods
University of St. Gallen - Institute of Economy and the Environment (IWOe-HSG); CESifo (Center for Economic Studies and Ifo Institute)
March 4, 2014
Journal of Institutional and Theoretical Economics, 2014, Vol. 170 (1), 5-23
The modern state has monopolized the legitimate use of force. This concept is twofold. First, the state is empowered with enforcement rights; second, the rights of the individuals are restricted. In a simple model of property rights with appropriation and defense activity, we show that a restriction of private enforcement is beneficial for the property owner, even if there are no economies of scale from public protection. We emphasize the role of the state as a commitment device for a certain level of enforcement. However, commitment will only work if the state can regulate private protection, such as private armies and mercenaries.
Number of Pages in PDF File: 19
Keywords: Centralization, Law and Economics, State, Contest Theory, Private Protection
JEL Classification: K42, P14, P37, P48, N40
Date posted: March 17, 2014
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