The Elgar Companion to Law and Economics, Second Edition
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The Elgar Companion to Law and Economics, Second Edition

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Edited by Jürgen G. Backhaus

This thoroughly updated and revised edition of a popular and authoritative reference work introduces the reader to the major concepts and leading contributors in the field of law and economics. The Companion features accessible, informative and provocative entries on all the significant issues, and breaks new ground by bringing together widely dispersed yet theoretically congruent ideas.
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Chapter 2: Property Rights and their Partitioning

Christian Müller and Manfred Tietzel

Extract

2 Property rights and their partitioning 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...

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