Elgar original reference
Edited by Jürgen G. Backhaus
Christian Müller and Manfred Tietzel Property rights can be deﬁned as socially recognized entitlements of individuals to use a good. Here, the term ‘property’ is used in a broad sense and is meant to encompass the relations of actors to all scarce goods yielding utility, including rights not only to material resources but also to immaterial, human rights such as the right to vote and that of free speech (Furubotn and Pejovich, 1974, p. 3). One commonly distinguishes between the right to use a resource (usus), the right to appropriate returns (usus fructus), the right to change the form and substance of assets (abusus) and the right to sell or lease some or all of these rights to another user (alienation). Neoclassical microeconomics implicitly assumes all these rights to be fully laid in the hands of one single user and focused only on ‘the forces determining the price and the number of units of a good to which these rights attach’ (Demsetz, 1967, p. 347). In sharp contrast to this, the theory of property rights (see the surveys in Furubotn and Pejovich, 1972; DeAlessi, 1980; Tietzel, 1981; Eggertsson, 1990; Richter and Furubotn, 1996) emphasizes the possibility of differences between entitlement structures. For reasons discussed below it is held that any given property rights structure functions as a system of incentives consisting of rewards and punishments; this extended approach sheds light on the institutional aspects of choice that are taken to be given exogenously in orthodox theory. The traditional...
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