Research Handbook on the Economics of Property Law
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Research Handbook on the Economics of Property Law

  • Research Handbooks in Law and Economics series

Edited by Kenneth Ayotte and Henry E. Smith

Leading scholars in the field of law and economics contribute their original theoretical and empirical research to this major Handbook. Each chapter analyzes the basic architecture and important features of the institutions of property law from an economic point of view, while also providing an introduction to the issues and literature.
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Chapter 4: Private Property and Public Rights

Thomas W. Merrill

Extract

4 Private property and public rights Thomas W. Merrill An essential element of individual property is the legal right to exclude others from enjoying it. If the property is private, the right of exclusion may be absolute; if the property is affected with a public interest, the right of exclusion is qualified. – Louis D. Brandeis1 The public/private distinction has long played a central role in debates about the institution of property. Lawyers schooled in the common law and economists who write about property tend to accept the validity of the distinction between private property and public rights. They assume that most scarce resources are owned by someone as property, and the owner has broad discretionary authority over the use and disposition of the resource. This discretionary ‘gatekeeper’ power is qualified in exceptional circumstances by considerations of public rights. But individuated control by owners remains the norm. This conventional perspective is captured in the statement of Justice Brandeis quoted above. The Legal Realist movement that began in the 1920s sought to debunk the public/ private distinction, along with other fundamental categories in legal thought.2 The Realists argued that all legal rights depend on collective recognition and enforcement, so all rights – including property rights – are effectively public. To single out some legal entitlements as ‘private,’ the Realists argued, is to engage in empty rhetoric or beg the question about the appropriate balance of authority between the individual and the state. The Realists and their successors also thought the state should play...

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