Property Enforcement as Organized Consent

Posted: 13 Jun 2003

See all articles by Benito Arruñada

Benito Arruñada

Pompeu Fabra University - Department of Economics and Business; Barcelona GSE

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Abstract

This article develops and tests a theory of the institutions that make property rights viable, ensuring their enforcement, mobilizing the collateral value of assets, and promoting growth. In contrast to contractual rights, property rights are enforced in rem, being affected only with the consent of the right holder. This ensures enforcement but is costly when multiple, potentially colliding rights are held in the same asset. Different institutions reduce the cost of gathering consents to overcome this trade-off of enforcement benefits for consent costs: recording of deeds with title insurance, registration of rights, and even a regimen of purely private transactions. All three provide functionally similar services, but their relative performance varies with the number of transactions, the risk of political opportunism, and regulatory consistency. The analysis also shows the rationality of allowing competition in the preparation and support of private contracts while requiring territorial monopoly in recording and registration activities, this to ensure independence and protect third parties.

JEL Classification: D23, K11, K12, L85, Q15

Suggested Citation

Arruñada, Benito, Property Enforcement as Organized Consent. The Journal of Law, Economics, and Organization, Vol. 19, No. 2, pp. 401-444, 2003. Available at SSRN: https://ssrn.com/abstract=410546

Benito Arruñada (Contact Author)

Pompeu Fabra University - Department of Economics and Business ( email )

Ramon Trias Fargas 25-27
Department of Economics and Business
Barcelona, 08005
Spain
+34 93 542 25 72 (Phone)
+34 93 542 17 46 (Fax)

HOME PAGE: http://www.econ.upf.edu/~arrunada

Barcelona GSE ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

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