1. Ownership and property rights M/R chapter 9 Primary aim to look into questions of 1.An efficient allocation of ownership and property rights 2.An efficient allocation of property

2. Advantages and disadvantages of private property Efficient institution for providing people with incentives to create, maintain and improve values? One questions arising is Is it possible to formulate a few general conditions that are necessary to assure that an institution for private property is efficient?

3. Institutions of private property are advantageous If bargaining costs are low If the three conditions for ‘no wealth effect’ are fulfilled If there are clear property rights If property is easily tradable.

4. Property rights of non-investing parties: auctions a solution to externalities Clear property rights could be assigned to the polluters Auctions could be arranged: polluters to whom the costs for not polluting is lower than the price they can get for their property rights, can trade these rights. If the different property holders are able to bargain without costs, then the initial allocation of property rights will be redistributed in a way where total value is maximized and the environmental resources are utilized efficiently.

5. The shareholder value model is founded on theory of ownership and property rights Perspectives on private property Private property is a social relationship in production that legitimize theft (the owners of firms get their income out of a surplus value produced by the workers) Owning an asset means having the residual rights of control: the right to make any decisions concerning the asset’s use that are not explicitly controlled by law or assigned to another by contract.

6. Private-property-advantages disappear with the ‘classical firm’ The efficiency of private property and profit maximization depend on: Competitive selection on product markets Markets for corporate control, where private property is tradable (residual claimant and control is concentrated to those people, who are the best bosses)

7. Methods or theories concerning the assignment of ownership rights Two possibilities: 1. Assets A and B are owned by one person or organization (“integrated solution”) 2.Asset A is owned by person one and asset B by person two and the use of the assets are regulated by an ordinary market contract (“market solution”). Criteria for the choice between an ‘integrated’ and a ‘market solution’ based on properties of the transaction (TCA): Asset specificity (“Hold-Up Problem”) Frequency of transactions and duration of a relationship Uncertainty.