Overlapping Jurisdictions, Proprietary Communities, and Competition in the Realm of Law
Journal of Institutional and Theoretical Economics, Vol. 162, No. 3, pp. 516-534, September 2006
Posted: 10 Sep 2010
Date Written: 2006
FREY  and others propose subjecting governments to competition within their jurisdiction, but classical liberals argue that having competing law enforcers cannot work. This article describes a hybrid system that relies on markets but has one law enforcement agency per region, with profit motivated proprietors policing their properties. Vertically integrated proprietary communities wishing to attract customers would need to police their property in a way that patrons desire. Although a monopoly on the use of force would exist, bundling law with real estate makes the law enforcer the residual claimant and creates incentives for them to not to expropriate their clientele.
JEL Classification: D740, H100. K400, L330
Suggested Citation: Suggested Citation