The Property-Contract Balance

41 Pages Posted: 17 Jun 2012 Last revised: 4 Nov 2015

See all articles by Giuseppe Dari‐Mattiacci

Giuseppe Dari‐Mattiacci

Columbia University - Law School

Carmine Guerriero

Department of Economics, University of Bologna

zhenxing huang

Shanghai University of Finance and Economics

Date Written: November 2, 2015

Abstract

We identify a key trade-off between protecting property rights and enhancing reliance on contracts. For instance, when a dishonest intermediary transfers a good to an innocent buyer without the owner's consent, who between buyer and owner should retain the good? We show that the optimal institution maximizes the agents' valuation of the good rather than their incentives to protect property and inquire about title. Furthermore, enhancing reliance on contracts is comparatively more appealing when fewer intermediaries are honest and law enforcement is more efficient. This is consistent with novel data on the rules on the acquisition of ownership over movables.

Keywords: Property Rights, Contracts, Culture, Public Enforcement, Good Faith

JEL Classification: P14, L11, Z10, K11

Suggested Citation

Dari-Mattiacci, Giuseppe and Guerriero, Carmine and huang, zhenxing, The Property-Contract Balance (November 2, 2015). Amsterdam Law School Research Paper No. 2012-70; Amsterdam Center for Law & Economics Working Paper No. 2012-01. Available at SSRN: https://ssrn.com/abstract=2084839 or http://dx.doi.org/10.2139/ssrn.2084839

Giuseppe Dari-Mattiacci (Contact Author)

Columbia University - Law School ( email )

435 West 116th Street
New York, NY 10025
United States

HOME PAGE: http://www.law.columbia.edu/faculty/giuseppe-dari-mattiacci

Carmine Guerriero

Department of Economics, University of Bologna ( email )

Strada Maggiore 45
Bologna, 40125
Italy

Zhenxing Huang

Shanghai University of Finance and Economics ( email )

111 Wuchuan Road
Room 427
Shanghai, Shanghai 200433
China
0086-21-65902331 (Phone)

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