'Unclear' Initial Delineation of Property Boundaries and the Third Coase Theorem

Lai, Lawrence W.C., Chau, K.W. and Lorne, Frank T., 'Unclear' initial delineation of property boundaries and the third Coase Theorem. Land Use Policy, Forthcoming

30 Pages Posted: 2 May 2015

See all articles by Lawrence Wai-Chung Lai

Lawrence Wai-Chung Lai

The University of Hong Kong - Department of Real Estate and Construction

K.W. Chau

The University of Hong Kong - Ronald Coase Centre for Property Rights Research - Economics

Frank T. Lorne

Universitas 21 Global - Economics; University of Hong Kong

Date Written: May 1, 2015

Abstract

This interdisciplinary study, which references previous research on the evolution of land law and real world examples of land market operating with unclear property boundaries, demonstrates that Ronald Coase’s argument that delimitation of property rights is a prelude to market transaction applies to urban development, in which certitude in initial property boundaries in geodetic terms is not overriding. It explains why even a powerful landlord can be unsure of and do not even want to know the boundaries of the land of his/her tenants and why this mapping limitation in itself does not inhibit market transactions. When land is treated as an input for a chattel that is no longer fixed to land, area measurement is more important than boundary-fixing. When land becomes valued for its location and fixtures (i.e., as real estate), precise boundary delineations and disputes over the precision of cadastral surveys emerge.

Boundary disputes are a particularly painful form of litigation. Feelings run high and disproportionate amounts of money are spent. Claims to small and valueless pieces of land are pressed with the zeal of Fortinbras’ army (Lord Hoffman in Wibberley v. Insley [1999] HL15).

Keywords: Coase Theorem, land boundary, land surveying, land reform, Austrian economics.

JEL Classification: A19, D23, K10, R1

Suggested Citation

Lai, Lawrence W. C. and Chau, Kwong Wing and Lorne, Frank T., 'Unclear' Initial Delineation of Property Boundaries and the Third Coase Theorem (May 1, 2015). Lai, Lawrence W.C., Chau, K.W. and Lorne, Frank T., 'Unclear' initial delineation of property boundaries and the third Coase Theorem. Land Use Policy, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2601277

Lawrence W. C. Lai (Contact Author)

The University of Hong Kong - Department of Real Estate and Construction ( email )

Hong Kong
China
(852) 259 7988 (Phone)
(852) 2559 9457 (Fax)

Kwong Wing Chau

The University of Hong Kong - Ronald Coase Centre for Property Rights Research - Economics ( email )

Ronald Coase Centre for Property Rights Research
Pokfulam Road
Hong Kong
Hong Kong
(852)28592128 (Phone)
(852)25599457 (Fax)

Frank T. Lorne

Universitas 21 Global - Economics ( email )

5 Shenton Way
#01-01 UIC Building, 068808
Singapore

University of Hong Kong

Pokfulam Road
Hong Kong, HK
China

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