On the Dual Nature of Weak Property Rights

31 Pages Posted: 17 Jan 2012

See all articles by Louis Hotte

Louis Hotte

University of Ottawa

Randy McFerrin

New Mexico State University - College of Home Economics

Douglas Wills

University of Washington, Tacoma - Department of Business Administration

Multiple version iconThere are 2 versions of this paper

Date Written: April 17, 2011

Abstract

In the natural-resource literature, conventional wisdom holds that weak property rights will cause a resource to be over-exploited. This is because weak property rights are typically perceived as a problem of input exclusion. We present evidence to the effect that weak property rights often take the form of contestable outputs -- or output theft -- and that this has an impact on resource use. We propose a model of resource use under generally weak property rights -- or weak state presence -- when resource users face the dual problem of input exclusion and output appropriation. We show that introducing the possibility that outputs be contested acts as an output tax, with the added twist that resource users effectively determine the tax level. This tax has a depressive effect on input use. Whether the resource is under- or over-exploited depends on the relative severity of output appropriation and input exclusion problems. Increasing enforcement measures against theft may lead to severe resource overuse. Efficiency considerations requires to account not only for direct resource input use, but also for thieves' efforts and gains as well as the costs of enforcement against theft and trespass.

Keywords: Property Rights, Weak State Presence, Enforcement, Exclusion, Appropriation, Natural Resources, Trespass, Theft, Over-Exploitation, Under-Exploitation

JEL Classification: K11, K42, Q2, N50, O13

Suggested Citation

Hotte, Louis and McFerrin, Randy and Wills, Douglas T., On the Dual Nature of Weak Property Rights (April 17, 2011). Available at SSRN: https://ssrn.com/abstract=1986825 or http://dx.doi.org/10.2139/ssrn.1986825

Louis Hotte (Contact Author)

University of Ottawa ( email )

Department of Economics
55 Laurier E.
Ottawa, Ontario K1N 6N5
Canada
+161 356 25800 1692 (Phone)
+161 356 25999 (Fax)

HOME PAGE: http://aix1.uottawa.ca/~lhott3/

Randy McFerrin

New Mexico State University - College of Home Economics ( email )

United States

Douglas T. Wills

University of Washington, Tacoma - Department of Business Administration ( email )

1900 Commerce Street, Box 358420
Tacoma, WA 98402-3100
United States
253-692-5626 (Phone)
253-692-4424 (Fax)

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