Securing Property Rights

53 Pages Posted: 19 Nov 2016

See all articles by Edward L. Glaeser

Edward L. Glaeser

Harvard University - Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER)

Giacomo A. M. Ponzetto

CREI - Universitat Pompeu Fabra

Andrei Shleifer

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Multiple version iconThere are 3 versions of this paper

Date Written: September 1, 2016

Abstract

A central challenge in securing property rights is the subversion of justice through legal skill, bribery, or physical force by the strong — the state or its powerful citizens — against the weak. We present evidence that the less educated and poorer citizens in many countries feel their property rights are least secure. We then present a model of a farmer and a mine which can pollute his farm in a jurisdiction where the mine can subvert law enforcement. We show that, in this model, injunctions or other forms of property rules work better than compensation for damage or liability rules. The equivalences of the Coase Theorem break down in realistic ways. The case for injunctions is even stronger when parties can invest in power. Our approach sheds light on several controversies in law and economics, but also applies to practical problems in developing countries, such as low demand for formality, law enforcement under uncertain property rights, and unresolved conflicts between environmental damage and development.

JEL Classification: H13, K11, O43

Suggested Citation

Glaeser, Edward L. and Ponzetto, Giacomo A. M. and Shleifer, Andrei, Securing Property Rights (September 1, 2016). HKS Working Paper No. RWP16-040. Available at SSRN: https://ssrn.com/abstract=2872207 or http://dx.doi.org/10.2139/ssrn.2872207

Edward L. Glaeser (Contact Author)

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Giacomo A. M. Ponzetto

CREI - Universitat Pompeu Fabra ( email )

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Andrei Shleifer

Harvard University - Department of Economics ( email )

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