Spontaneous (Non) Emergence of Property Rights

Abstract

It is often argued that secured property rights are established in response to grassroots demand of private owners. The paper analyzes preferences of private owners over the degree of protection of property rights. The framework for this analysis is an equilibrium model, which combines production and appropriation activities. It is shown that inequality in resource ownership and/or relative inefficiency of production technologies could make wealthier agents to favor less than full protection of property rights. If such agents decide the outcome of public choice of a property rights regime, then fully secured property rights will not emerge from the grassroots. This conclusion is consistent with the failure to establish an efficient system of property rights regime in Russia.

Keywords: Russia, property rights