Presentation on theme: "ECON 1450 – Professor Berkowitz Lecture Notes -Chapter 6 Property rights Use assets Exclusion Disposal Property Rights and Incentives."— Presentation transcript:
ECON 1450 – Professor Berkowitz Lecture Notes -Chapter 6 Property rights Use assets Exclusion Disposal Property Rights and Incentives
Evidence Aggregate – do property rights matter for growth Measuring property rights – inspired by glorious revolution – check on the power of the executive branch
Implications of Property Rights for Growth The Colonial Origins of Comparative Development: An Empirical Investigation By DARON ACEMOGLU, SIMON JOHNSON, AND JAMES A. ROBINSON*, AER, 2001 http://econ-www.mit.edu/files/4123 Measure property rights Quantify impact of property rights for growth
Economics of Property Law Coase Theorem Assignment of Property Rights and Distribution of Wealth Examples of the Coase Theorem Transaction Costs Loss Aversion and the Endowment Effect
Enforcement Rules Property v. Liability Rules Choosing Property or Liability? Trespass and Nuisance Inalienability of Property Rights
General Transaction Structure Assignment Enforcement
Consensual Transfers of Property Legal Protection of Ownership Analysis of Land Title Systems – recording versus registration Land title in the USA De Soto and land titling
Limited and Divided Ownership Leasing Private versus Group Ownership The Anti-Commons Taxes and China versus Russia
Mitigation of Damages Example – owner of duplex agrees to rent an apt to a student for 12 months at $300 per month After 6 months the student abandons apt After 12 months, landlord files for $1,800 unpaid rent Student notes that friend offered landlord $200 per month for remaining 6 months
Mitigation – cont’d Landlord refuses to take on new lease holder Student admits to breaching contract Student also argues landlord should only get $600 Court sides with student – “contractors have a duty to take on any reasonable (cost-effective) efforts to mitigate damages from breach!
Impossibility and related excuses Impossibility Frustration of purpose Commercial impracticability
Courts discharge contracts when performance is feasible but economically burdensome Conditional rule that discharges performance without penalty when costs are sufficiently high
Specific performance When is it efficient for the court to forego monetary damages (D) and, instead, order the promisor to perform the contract as written?