Property Rights and Local Public Goods: Toward a Better Future for Urban Communities

Abstract

This article identifies a significant phenomenon in current urban settings, according to which the otherwise unorganized users of government-owned local public goods, such as parks or playgrounds, often engage in informal cooperation and coordination in the on-going operation, maintenance and improvement of the resource.

Why is such a phenomenon important? Briefly stated, the informal cluster of users may, in many cases, determine the value of the local public good: local user coordination that starts out spontaneously and stabilizes into a long-enduring cooperative mode makes the public resource successful, endowing significant direct benefits as well as positive spillover effects. On the contrary, under-investment and apathy by the local users often make these resources of negative value, becoming a sheer nuisance to their surroundings and creating a major deadweight loss.

This phenomenon is especially important in light of the budgetary and administrative constraints that governments have been facing in the past few decades. However, this new implicit role allocation is unmatched by current legal rules, which preserve government's almost absolute liberty to terminate or adversely change these goods at its will, by either diverting the public resource to a new use that will serve the general public or a different sub-group, or simply cashing in on the public resource by its sale to a private developer, with diversion of the revenues to the government's general budget.

This article suggests to resolve the tension through a carefully tailored expansion of current takings doctrine to scenarios of informal takings of local public goods, which would entitle the local group, in appropriate cases, to a collective remedy, mainly in the form of a substitute facility.

Note: This is a description of the paper and not the actual abstract.

Keywords: Property, urban, takings, social norms, interest group theory, collective action, allocative efficiency, community, local public goods, local government

JEL Classification: H41, H42, H72, K11, R51