The Rhino's Horn: Incomplete Property Rights and the Optimal Value of an Asset
Posted: 29 Mar 2002
Under certain conditions it is possible for the costs of enforcing property rights to exceed their benefit for assets with high first-best values. Under these conditions, previously privately held assets may revert to the public domain. This paper analyzes this prospect and considers attempts to lower the gross value of the asset as a possible method of maintaining the private property right. The paper examines several examples including built in obsolescence and penal colonies to demonstrate the general idea.
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