Research Handbooks in Law and Economics series
Edited by Kenneth Ayotte and Henry E. Smith
Henry E. Smith Property rights and property systems vary along a large number of dimensions, and economics has proven very fruitful in analyzing these patterns and even the nature of the institution of property itself. In its early days, the efficiency of various features of property law dominated the economic analysis of property, like law and economics more generally. This first generation of economic analysis of property dovetailed with one of the prime legacies of the policy-oriented anti-formalist legal realism school that started in the 1920s: the bundle of rights or ‘bundle of sticks’ picture of property. On the ‘bundle’ view, property is simply a collection of rights, duties, privileges, liabilities, and so on, and attaching the label ‘property’ is more or less a matter of taste. Economically a ‘property right’ could be any of these individual sticks – any socially sanctioned expectation to be able to take valued actions with respect to a resource, availing against one or more others. So the expectation of sowing crops or building a house was property, as was the larger collection of property rights we might more conventionally call ownership. The task of economic analysis appeared to be to evaluate these sticks for their cost-effectiveness. As a grab bag of rules and other institutional features, property was no different from torts or contracts. More recent economic analysis of property law has begun to address what is special about property. The chapters in this volume exemplify this new direction in the economic analysis of property...