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The Elgar Companion to the Economics of Property Rights

The Elgar Companion to the Economics of Property Rights

Elgar original reference

Edited by Enrico Colombatto

Economics is a matter of choice and growth, of interaction and exchange among individuals. Because property rights define the rules of these interactions and the objects of exchange, it is vital to fully understand the institutions and implications of the various property-rights regimes. With over 20 original and specially commissioned chapters, this book takes the reader from the historical and moral foundations of the discipline to the frontiers of scholarly research in the field.

Chapter 6: Judicial System and Property Rights

Christian Barrère

Subjects: economics and finance, public choice theory, public sector economics, politics and public policy, public choice


Christian Barrère Introduction Property rights (PRs) constitute a system that defines relative rights with respect to the utilization of scarce resources, that is to say somebody’s rights in relation to the rights of anybody else. As law is inefficient without law enforcement it cannot work without a judicial system. The judicial system enforces PRs by monopolizing the power of constraint that obliges everyone to accept the PR distribution and its consequences. But the judicial system plays other roles in the application of property rights. In particular, it specifies the conditions of use of property rights when there are different interpretations and when opposite claims are advanced. Hence the judicial system is a system of legitimate interpretation and distribution of the concrete effects of PRs in a social context. The judicial system has two main effects on PRs: efficiency and distribution – hence, equity. This applies to the three functions concerning the judicial system: (i) PR enforcement, (ii) PR interpretation and (iii) PR specification. First, we shall see that the judicial enforcement of PRs is an efficient way to strengthen the incentives to cooperate and therefore to increase social welfare, especially when competition becomes tighter and when opportunism undermines the substitutes for a judiciary such as ethics or customs. Therefore judicial enforcement is a public and a club good; but as it allows the distribution of effective rights, powers and wealth to be modified, judicial enforcement does not represent a standard public good. An...

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