PROPERTY RIGHTS

Question 1

Ownership of property

Answer 1

To own: To have or hold as one’s own; to belong to one,
be the proprietor of, possess.

Several tests:
* Property has value (implies scarcity)
* Property is definable /
controllable
* Others can be excluded from its use or enjoyment

Ownership implies following rights:
* to use or ‘enjoy’ the property (access & withdrawal)
* to control who else may use the property (exclusion)
* to regulate use patterns (management)
* to sell, rent or dispose of the property to another (alienation)

Question 2

What is the problem with Natural Resources?

Answer 2

Many natural resources do not meet all the ownership conditions (e.g., excludability).

Ownership of these resources can therefore not be clearly defined.

Private ownership is critical for the free-market economy to work (i.e., allocate resource efficiently)

Market Failure!!

Question 3

What are the forms of Property Rights?

Answer 3

1. Private property
   Owned by individuals or
   corporations; Includes land, objects, etc.; Established and controlled
   by cultural and legal systems; Access is by permission; Others must respect owner’s
   rights; Strong incentive to manage properly.
2. Community-owned property (communal regulation): Owned by a group of people
   whose membership is
   defined (e.g., cooperative,
   community); The members control access
   and rules for use by
   communal decision; Shared incentive for proper management; Non-members must respect the rights of members.
3. Public/State-owned property (public domain): Owned by government or government corporation on behalf of citizens; usually in the ‘public interest’; Access is by permission (rules and
   regulations); May be sold or rented to contribute to revenue; May be given away, sometimes with subsidies; May include commercial and non-commercial properties
4. Open access (no property rights - unregulated): Generally not owned by anybody; May be owned by the state but ownership
   difficult to enforce; Access is free to all (key point!) No one can be excluded; Resource is not managed by an owner; “Right of capture” applies
5. Common heritage of humanity: Principle of international law that applies to certain
   global common and elements of benefit to the all of humanity (natural, cultural heritage) that …
   ; should be held in trust for future generations; should not be unilaterally exploited by individual states or corporations or other entities; should rather be exploited under some sort of international arrangement or regime for the benefit
   of mankind as a whole.; All nations must manage resources on behalf of all; All nations must actively share with each other the benefits

Question 4

Excludability?

Answer 4

Excludable goods and
services are those for which one can at low cost prevent those who have not paid for the good from consuming it.

Non-excludable goods and services are those for which it is difficult to prevent people from using them.