Towards a Theory of Incomplete Property Rights

Abstract

The aim of this paper is to critically revise the well-established attitude towards economic theorizing on property as a complete bundle of rights over well-defined uses. While some authors have previously introduced the incomplete dimension of property in their discourse, they have conceptualized incompleteness either in terms of undiscovered uses, weakly enforced rights or weakly partitioned rights. We move from a different idea of incompleteness, namely the initial lack of attribution of well-defined rights over new undefined uses of an asset. We suggest a possible direction of future research towards an economic theory of incomplete property, namely a theory of property intended as an incomplete bundle of defined and undefined rights over the uses of an asset. The elements of the theory here delineated may contribute to reconcile and to integrate under a common framework some of the main debated issues on the nature and the dynamics of property rights. Moreover, the theory shows the existence of a complex coevolutionary relationship between property and externalities.

Keywords: property, rights incompleteness, externalities, transactions

JEL Classification: D620, D230, K110, P140