Property Rights Imperfections, Asset Allocation, and Welfare: Co-Ownership in Bulgaria

LICOS Centre for Institutions and Economic Performance Discussion Paper No. 180/2007

33 Pages Posted: 14 Mar 2008

See all articles by Liesbet Vranken

Liesbet Vranken

KU Leuven - Centre for Institutions and Economic Performance (LICOS)

Karen Macours

Paris School of Economics (PSE)

Nivelin Noev

European Commission

Johan F. M. Swinnen

KU Leuven - Centre for Institutions and Economic Performance (LICOS); European Commission, DG II

Date Written: January 2007

Abstract

This paper analyzes how imperfections of property rights affect allocation of assets and welfare, using micro-survey data from Bulgaria. Co-ownership of assets is widespread in many countries due to inheritance. Central and Eastern Europe offers an interesting natural experiment to assess the effects of such rights imperfections because of the asset restitution process in the 1990s. Bulgaria is particularly interesting because of the prominence of the co-ownership problem (about half of all land plots are co-owned), because of the strong fragmentation of land, and because of legislation providing an instrument to separate out chosen (endogenous) versus forced (exogenous) forms of co-ownership. We find that land in co-ownership is much more likely to be used by less efficient farm organizations or to be left abandoned, and that it leads to significant welfare losses.

Suggested Citation

Vranken, Liesbet and Macours, Karen and Noev, Nivelin and Swinnen, Johan F.M., Property Rights Imperfections, Asset Allocation, and Welfare: Co-Ownership in Bulgaria (January 2007). LICOS Centre for Institutions and Economic Performance Discussion Paper No. 180/2007. Available at SSRN: https://ssrn.com/abstract=1105670 or http://dx.doi.org/10.2139/ssrn.1105670

Liesbet Vranken (Contact Author)

KU Leuven - Centre for Institutions and Economic Performance (LICOS) ( email )

Waaistraat 6 - box 3511
Leuven, 3000
Belgium

Karen Macours

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Nivelin Noev

European Commission ( email )

Rue de la Loi 200
Brussels, B-1049
Belgium

Johan F.M. Swinnen

KU Leuven - Centre for Institutions and Economic Performance (LICOS) ( email )

Waaistraat 6
Leuven, B-3000
Belgium

European Commission, DG II ( email )

Wetstrath 200
Office 15172
1049 Brussels
Belgium
+32-2-2960442 (Phone)
Not available (Fax)

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