Insecure Property and Technological Backwardness
19 Pages Posted: 22 Jul 2005
We consider the incentive to adopt superior technologies when private property is insecure. The welfare costs of insecure property can be substantially greater than those commonly associated with diversion and with the disincentive effect induced by imperfect appropriation of returns. When private property is sufficiently insecure, anticipation of conflict over economic distribution gives rise to technological backwardness, even though (1) superior technologies are readily available at zero cost and (2) the ex post diversion of resources might be small.
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