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Imperfect Property Rights

52 Pages Posted: 19 Oct 2009  

James E. Bessen

Boston University - School of Law; Research on Innovation

Date Written: October 16, 2009

Abstract

In theory, property rights allow markets to achieve Pareto optimal allocations. But the literature on contracting largely ignores what happens when property rights are imperfectly defined and enforced. Although some models include weak enforcement or poorly defined rights or "anticommons," this paper develops a general model that includes all of these possibilities. I find that combinations matter: Policy prescriptions to remedy individual imperfections are sometimes inappropriate under other conditions. For example, stronger penalties for violating rights can decrease Pareto efficiency, contrary to a common view. Also, collective rights organizations, such as patent pools, sometimes worsen problems of overlapping claims.

Keywords: property, markets, externalities, contract enforcement, regulation

JEL Classification: K11, K42, L14, L51

Suggested Citation

Bessen, James E., Imperfect Property Rights (October 16, 2009). Boston Univ. School of Law Working Paper No. 09-46. Available at SSRN: https://ssrn.com/abstract=1489880 or http://dx.doi.org/10.2139/ssrn.1489880

James E. Bessen (Contact Author)

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Research on Innovation ( email )

202 High Head Rd.
Harpswell, ME 04079
United States
617-531-2092 (Phone)

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